partnership accounting - PARTNERSHIP INTEREST

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Anil Kumar Meena (Querist)
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18 February 2010 Hi,

I am bit confuse in the accounting concept for partnership interest,
if a company have partnership interest in an firm and firm incurred some loss during the year that what would be the accounting treatment for the partnership firm for loss distribution to company have partnership interest and what accounting to be done in the book of partner company,

Please guys revert ASAP.
Its urgent

shakuntala chhangani

shakuntala chhangani (Expert)
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22 February 2010 Hi Anil,
In the books of the firm :
Partners Capital /Current A/c Dr. XX
To P/L Appropriation A/c XX

In the books of co. :
Share of loss in firm A/c Dr. XX
To Investment in -- firm A/c XX

P/L A/c Dr. XX
To share of loss in firm A/c XX
Regards, CA Shakuntala Chhangani

Anil Kumar Meena

Anil Kumar Meena (Querist)
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02 March 2010 Thanks shakuntla

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shakuntala chhangani

shakuntala chhangani (Expert)
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05 March 2010 Most welcome Anilji

Anil Kumar Meena

Anil Kumar Meena (Querist)
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28 March 2010 Hi Shakuntala ,

after some analysis i found that above enties have error...
In case of partnership interst patner of business dont have investment in partnership firm but he have a right or obligation to share profit or loss....

So if the partner dont have investment in firm so how he credit the investment account;;;
If he do so....so the balance sheet shows the negative investment which is not logical...
Please make me correct if i am wrong...

take care....
GUD NITE

Anil Kumar Meena

Anil Kumar Meena (Querist)
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29 June 2010 hey can anyone please resolve my above quriey ?

Please

shakuntala chhangani

shakuntala chhangani (Expert)
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29 June 2010 Hi again Anilji, I apologise for giving late answer as i m not the frequent visitor of this sight. The above entries are absolutely right. for the same u can check schedule VI part I to Cos Act.
Under the head "Investments" the co. will have to disclose separately the invt. in partnership firm.

shakuntala chhangani

shakuntala chhangani (Expert)
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29 June 2010 But it seems that u r IPCC student. u can also refer to ur past exam questions where a firm was hving 3 partners, an individual and two cos (Mr. X, Y Ltd. and Z Ltd.) and investment account was asked in the books of Y Ltd. and disclosure in Z Ltd's books.
If u hv any further doubt, revert back to me. I will surely reply, eventhough late.
Regards, CA Shakuntala Chhangani

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Anil Kumar Meena

Anil Kumar Meena (Querist)
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02 August 2010 Thanks Shakuntala...

if the co, have 0% investment and have the obligation to share profit and loss of that firm..

Then..then loss..showz the negative investment in BALANCE SHEET..

is it possible ,, we show the negative investment in balance sheet ?

Thanks
Anil

shakuntala chhangani

shakuntala chhangani (Expert)
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12 August 2010 Hi again Anil, the answer to ur query is :
If the investment is 0% then also it may be covered under partnership Act which clarifies that capital contribution depends on mutual agreement amongst the partners. U will have to look into the partnership deed to decide about whether the co. is a partner or not. if the answer is yes then as a result of deducting the loss, the investment account will become negative. there is no provision in co. act about the disclosure of the same. But as per general practice, it can be shown as deduction from general reserve for disclosure purposes at the balance sheet date.
If the co. is not a partner then it must be a guarantor as it is bearing the burden of loss. in which case u will have to provide for the loss in the normal way.
Regards, CA Shakuntala Chhangani