IAS 20
Partnership
Partnership is a long-term commitment to operate in business together. The people who own a partnership are called partners. They maintain one set of accounting records and share the profits and losses.
Nature of Partnership
1. It is formed to make profits
2. It must obey the law as given in the Partnership Act 1890. If there is a limited partner, it must also comply with the Limited Partnership Act of 1907.
3. Normally there can be a minimum of two partners and a maximum of twenty partners.
4. Each partner (except for limited partners) must pay their share of any debts that the partnership could not pay. This can be said to be unlimited liability.
5. Partners who are not limited partners are known as general partners.
Limited Partnership
Limited partnerships are partnerships containing one or more limited partners. Limited partnership must be registered with the Registrar of Companies. Limited partners are not liable for the debts of the partnership with respect to unlimited liability.
Characteristics and Limitations of Limited Partnership
1. Their liability for the debts of the partnership is limited to the capital they have put in.
2. They are not allowed to take out or receive back any part of their contribution to the partnership during its lifetime.
3. They are not allowed to take part in the management of the partnership or to have the power to make the partnership take a decision.
4. All the partners cannot be limited partners, so there must be at least one general partner with unlimited liability.
Limited Liability Partnership
This form of partnership was first introduced in 2000. They differ from limited partnership in that partners are liable only to the extent of their capital invested. Also, all partners are permitted to take part in the management of the partnership.
Partnership Agreements
Agreements in writing are not necessary. However, it is better if a written agreement is drawn up by a lawyer
Partnership is a long-term commitment to operate in business together. The people who own a partnership are called partners. They maintain one set of accounting records and share the profits and losses.
Nature of Partnership
1. It is formed to make profits
2. It must obey the law as given in the Partnership Act 1890. If there is a limited partner, it must also comply with the Limited Partnership Act of 1907.
3. Normally there can be a minimum of two partners and a maximum of twenty partners.
4. Each partner (except for limited partners) must pay their share of any debts that the partnership could not pay. This can be said to be unlimited liability.
5. Partners who are not limited partners are known as general partners.
Limited Partnership
Limited partnerships are partnerships containing one or more limited partners. Limited partnership must be registered with the Registrar of Companies. Limited partners are not liable for the debts of the partnership with respect to unlimited liability.
Characteristics and Limitations of Limited Partnership
1. Their liability for the debts of the partnership is limited to the capital they have put in.
2. They are not allowed to take out or receive back any part of their contribution to the partnership during its lifetime.
3. They are not allowed to take part in the management of the partnership or to have the power to make the partnership take a decision.
4. All the partners cannot be limited partners, so there must be at least one general partner with unlimited liability.
Limited Liability Partnership
This form of partnership was first introduced in 2000. They differ from limited partnership in that partners are liable only to the extent of their capital invested. Also, all partners are permitted to take part in the management of the partnership.
Partnership Agreements
Agreements in writing are not necessary. However, it is better if a written agreement is drawn up by a lawyer