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  • 15 Marks

FA – Nov 2024 – L1 – Q1 – Partnership Financial Statements

Prepare the profit or loss and appropriation account and financial position statement for a partnership at retirement and admission of partners.

Atsu, Baba, and Chawe are in partnership, providing management services, sharing profits in the ratio 5:3:2 after charging annual salaries of GH¢18,000 each. Current accounts are not maintained. On 30 June 2024, Atsu retired.

Dua was admitted on 1 July 2024 to the partnership and is entitled to 30% of the profits of the current partnership, with the balance being shared equally between Baba and Chawe.

The previous partnership trial balance as of 30 June 2024 was as follows:

Description GH¢ GH¢
Capital accounts – Atsu 12,519
Capital accounts – Baba 65,844
Capital accounts – Chawe 33,618
Trade receivables 138,615
Inventories at 1 July 2023 6,000
Operating expenses 419,166
Investment 300
Bank overdraft 33,510
Trade payables 52,218
Revenue 565,296
Total 663,543 663,543

Additional Information:

  1. Inventory remains at GH¢6,000.
  2. Full provision is required for an irrecoverable debt of GH¢3,450.
  3. Adjustments agreed by partners:
    • The investment is to be included at GH¢4,500.
    • Goodwill, which remains in the books, is valued at GH¢72,000.
  4. On 1 July 2024, GH¢30,000 due to Atsu was transferred to Dua. The balance due to Atsu is to be repaid over three years, commencing on 1 July 2024.
  5. Dua introduced cash of GH¢22,500 to the partnership.

Required:
i) Prepare the statement of profit or loss and appropriation account of the previous partnership for the year ended 30 June 2024 and a statement of financial position at that date. (9 marks)
ii) Prepare the statement of financial position for the current partnership as of 1 July 2024. (6 marks)

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  • 15 Marks

AT – Nov 2017 – L3 – Q7 – Tax Implications of Mergers and Acquisitions

Advise on tax implications for Aba Foods merger/acquisition options with Ifedi Foods.

The prevailing economic condition has led to the business cessation of many SMEs. Aba Foods Limited, a well-known food and beverage company in Abia State, faced difficulties in securing long-term loans, preventing the replacement of its outdated equipment and leading to losses. To ensure continuity, the company considered mergers or acquisitions and entered discussions with Chief Egodi of Ifedi Group. Chief Egodi, concerned about the tax implications of potential arrangements, sought advice from your firm, Aliyara & Co., Chartered Accountants.

Required:
Provide a presentation in the form of advice:

(a) Explain the tax implications of Aba Foods Limited merging with Ifedi Foods and Beverage Limited, with Ifedi inheriting all assets and liabilities. (5 Marks)
(b) Explain the tax implications if Ifedi Foods and Beverage Limited is reconstituted to take over Aba Foods’ assets and liabilities. (5 Marks)
(c) Explain the tax implications if Ifedi Foods and Aba Foods enter a Joint Venture or Partnership Agreement. (5 Marks)

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  • 5 Marks

BL – Nov 2020 – L1 – SB – Q6c – Partnership Law

Assess the legality of different partnership arrangements.

Comment on the legality of the following relationships operating as partnerships:

i. A partnership of 16 persons established for charitable purposes
ii. Adex cooperative society consisting of 500 members
iii. Black and Blue law firm consisting of 31 lawyers
iv. Stone Partnership firm comprising Segun aged 28, Tunde aged 17
v. A partnership of volunteers for the purpose of helping persons displaced by flood.

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  • 1 Marks

BL – May 2012 – L1 – SA – Q11 – Partnership Law

Identify what a partner must do to dissolve a partnership.

What must a partner do by himself in order to dissolve the partnership in which he is a partner?

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  • 1 Marks

BL – May 2012 – L1 – SA – Q17 – Partnership Law

Identify the usual range of membership in a general partnership.

The membership of a general partnership is usually from:

A. Two to twenty persons
B. Two to twenty-five persons
C. One to thirty persons
D. One to twenty-five persons
E. Three to twenty-five persons

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  • 1 Marks

FA – May 2012 – L1 – SA – Q8 -Partnership Accounts

Identifying actions taken during the admission of a partner.

Which of the following is NOT an action for admission of a partner during the year?

A. Preparing the financial statements up to the date of admission
B. Determining goodwill, if any, at that date
C. Preparing a statement of account
D. Preparing a statement of financial position
E. Partners will decide if goodwill should be maintained in books or not.

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  • 1 Marks

BL – Nov 2011 – L1 – SA – Q6 – Partnership Law

Identify which aspect is not required in partnership agreements.

The parties in a partnership arrangement must agree on all of the following EXCEPT:
A. Profit sharing
B. Business management
C. Capital contribution
D. Dissolution
E. Pension reform

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  • 1 Marks

BL – Nov 2011 – L1 – SA – Q4 – Partnership Law

Identify the minimum number of general partners required in a valid limited partnership.

The minimum number of general partner(s) in a valid limited partnership is:
A. Two
B. Three
C. One
D. Four
E. Five

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  • 15 Marks

FA – Nov 2020 – L1 – SB – Q6b – Partnership Accounts

Prepare the revaluation account, partners' capital accounts, and the statement of financial position.

b. Emeka has been in business as a Japan spare part dealer. The last statement of financial position of his business as at September 30, 2019, is given below:

N’000 N’000
Equity
Capital 1,000
Retained earnings 130
1,130
Drawings (60)
1,070
Non-current assets:
PPE 1,100
Current assets:
Inventories 190
Trade payables 40
Bank 45
1,375 1,375

On October 1, 2019, he agreed with Bode to join him, and the new business will trade under the name and style EmBo Ventures.

Terms of the new business:

  1. Bode is to contribute capital of N1,250,000 for an equal share of profits.
  2. The firm will take over the assets and liabilities of Emeka at their book values, except for:
    • PPE: N1,250,000
    • Inventories: N175,000
  3. The partners will maintain equal capital, and any shortfall in Emeka’s capital should be made good by credit from revaluation or through additional funds.

Required:

Prepare for EmBo Ventures: i. Revaluation account (5 Marks)
ii. Partners’ capital accounts (5 Marks)
iii. Statement of financial position as at October 1, 2019 (5 Marks)

(Total: 15 Marks)

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  • 20 Marks

TAX – May 2019 – L2 – Q1a- Taxation of Partnerships and Sole Proprietorships

Compute adjusted income and profit allocation for a civil engineering partnership.

a) Obi Consults is a civil engineering consulting firm of many years. The founding partners are Bibi, Kose, and Fowora. The financial year-end of the firm is December 31 each year. The following information was extracted from the partnership’s financial statements/records for the year ended December 31, 2018:

Details Amount (N)
(i) Net profit for the year 21,575,000
(ii) Provision for depreciation 13,250,000
(iii) Fine paid for traffic offence 25,000
(iv) Donations to “politicians in business” 150,000
(v) Donation to National Library Board 165,000
(vi) Profit from sale of excavator 1,600,000
(vii) Capital allowances 6,575,000
(viii) Balancing allowance 677,000
(ix) Balancing charge 1,315,000

Additional information:

  • Profit sharing ratio: Bibi – 1/2, Kose – 1/4, Fowora – 1/4
  • Bibi and Fowora are entitled to 5% interest per annum on a loan of N10,500,000 each. Fowora’s loan was refunded fully on his retirement.
  • Salaries paid: Bibi – N10,800,000, Kose – N8,250,000, Fowora – N8,250,000
  • Fowora retired on June 30, 2018, and Jaycee was admitted as a new partner on July 1, 2018, with an annual salary of N8,250,000. Jaycee introduced a loan of N7,000,000 on July 1, 2018, entitled to a 5% interest per annum.
  • The profit-sharing ratios after Jaycee’s admission: Bibi – 1/2, Kose – 7/20, Jaycee – 3/20

You are required to:
(i) Compute the adjusted/assessable income of the partnership. (5 Marks)
(ii) Determine the share of profits among the partners. (3 Marks)
(iii) Show relevant workings for prorated salaries and interest on loans, assuming simple interest. (2 Marks)
(iv) Compute the assessable income of each partner. (10 Marks)

 

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  • 7 Marks

BL – May 2018 – L1 – SB – Q2b – Partnership Law

Discuss partnership roles and management changes.

de and Bola are partners in a firm consisting of ten other partners. Ade solely manages the business of the firm, while Bola is interested only in the profits of the business. In the course of managing the business of the firm, Ade made a payment of N10,000.00 for electricity and also incurred expenses on hotel bills while representing the firm in Tema, Ghana. Ade, who is now overwhelmed by the running of the firm, intends to introduce a friend into the business as a partner. In addition, Ade wants the business of the firm to be changed in order to attract more profit.

Required:
(i) What type of partners are Ade and Bola? Give reasons for your answer. (3 Marks)
(ii) Advise Ade on the money he paid for the electricity, the hotel bills as well as the plan to introduce a new partner. (4 Marks)

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  • 1 Marks

BL – May 2018 – L1 – SA – Q4 – Partnership Law

Identify the nature of the relationship in a partnership.

Partnership is the relationship which subsists between persons carrying on business in common with a view to
A. Assisting other partners
B. Making and sharing profit
C. Ensuring accuracy
D. Establishing good business
E. Deceiving the public

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  • 9 Marks

BL – Nov 2014 – L1 – SB – Q3a – Company Law

State distinctions between a limited liability company and a partnership, and explain a director’s duty regarding conflicts of interest.

a. Limited liability companies and partnerships are different in formation and characteristics.
You are required to:

i. State any FIVE distinctions between a limited liability company and a partnership.
(5 Marks)

ii. Explain briefly the duty that a director’s interest shall not conflict with his duties to the company and its consequences.
(4 Marks)

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Has Case Study
  • 14 Marks

SCS – Nov 2019 – L3 – Q1c – Methods of development

iscuss the strategic alliance proposal between Ghanalux and Sunlit Hotels.

i) Discuss the issues that should be considered when responding to proposals for a strategic alliance between Ghanalux and Sunlit Hotels.
(7 marks)

ii) Discuss the issues that should be considered when responding to proposals for a business combination with the tour company in Kumasi.
(7 marks)

 

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  • 4 Marks

TAX – Nov 2018 – L2 – SB – Q4b – Taxation of Partnerships and Sole Proprietorships

Discuss the rules of commencement in respect of partnership business.

Discuss the rules of commencement in respect of partnership business.

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  • 16 Marks

TAX – Nov 2018 – L2 – SB – Q4a – Taxation of Partnerships and Sole Proprietorships

Calculate each partner’s income from the partnership for 2016 and indicate the tax basis for assessment.

Solomon, Musa, and Chinnedu were classmates in their secondary school days. They are friends with a passion for running a joint business because of their trust in one another. They formed a partnership some years later, providing specialized agricultural engineering services to the agricultural sector. Accounts are made up to December 31 each year. The following are the adjusted profits for tax purposes:

Year Ended Adjusted Profits (N)
December 31, 2014 3,240,000
December 31, 2015 3,712,500
December 31, 2016 5,400,000
December 31, 2017 4,950,000

Additional information:
(i) Solomon, Musa, and Chinnedu are to share profits in the ratio of 3:6:3, respectively.
(ii) Salaries drawn:

  • Solomon: N810,000
  • Musa: N540,000
  • Chinnedu: N405,000

(iii) Interest on capital is 7½%.
(iv) Capital account of each partner:

  • Solomon: N337,500
  • Musa: N675,000
  • Chinnedu: N473,500

(v) On May 31, 2016, Solomon retired, and Bakare, another old school mate, was admitted on June 1, 2016, on an annual salary of N405,000. He introduced a capital of N472,500 and was to have the same profit-sharing ratio as Solomon.

Required:
Calculate each partner’s income from the partnership business for the 2016 year of assessment and indicate the basis for which each partner will be assessed to tax.

 

 

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  • 20 Marks

FA – May 2018 – L1 – SB – Q5 – Partnership Accounts

Prepares the statement of financial position for the partnership formation between Yerima and Boluke.

Yerima and Boluke have been friends for some time, and they both had different businesses as sole traders. They decided to form a partnership with effect from May 1, 2017. Their respective financial positions on April 30, 2017, were as follows:

Partnership Agreement Details:
(i) Yerima: Premises were revalued at N30,000,000 to be used as an office annex, and equipment valued at N3,000,000 was counted as obsolete. Some customers were found unable to pay their outstanding debts, so N2,000,000 should be written off. The payables were paid out of the bank balance, and other assets were brought in at book value.

(ii) Boluke: Agreed to acquire additional equipment costing N3,000,000, pay his payables from his bank balance, repay his loan, and bring in other assets at book values.

Required:
a. Prepare the statement of financial position for the partnership of Yerima and Boluke as at May 1, 2017. (10 Marks)

b. State TEN provisions that should be contained in a partnership agreement. (10 Marks)
(Total: 20 Marks)

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  • 5 Marks

BMF – Nov 2021 – L1 – SB – Q2e – Business and Organizational Structures and Choices

Question asking for the advantages and disadvantages of joint ventures.

State THREE advantages and TWO disadvantages of joint ventures.

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