Answer to Question #206934 in Accounting for Thanos

Question

Which one of the following alternatives is correct?

 

•  A. Since partnerships are not governed by a law requiring that IFRS be applied, it is not possible to introduce a standardised accounting procedure according to which changes in the ownership structure of partnerships ought to be recorded.
•  B. Since a partnership is a legal entity, the ownership of a partnership is vested in the partners, and not in the partnership.
•  C. From the legal perspective, the activities of a dis­solved and a subsequent new partnership are not separately accounted for and reported on.
•  D. When a change in the ownership structure of a partnership occurs, a new partnership agreement is entered into by the new partners which causes the existing partnership to continue with its business operations.
•  E. The retirement of a partner from a partnership does not require the calculation of a new profit-sharing ratio but a simple reallocation of a retired partner’s share.

Answer 1

D) When a change in the ownership structure of a partnership occurs, a new partnership agreement is entered into by the new partners which causes the existing partnership to continue with its business operations.