Accounting for Liquidation of a Partnership Essay - 1

Accounting for Liquidation of a Partnership - Essay Example Hence, the balance sheet is the document open in the liquidation process (Delaney & Whittington, 2005). Liquidating a partnership necessitates selling noncash assets for cash and recognition of gain or loss on realization, allocation of the gains or losses to the partners based on their profit/loss ratios, cash payment of the liabilities of the partnership and distributing the remaining cash to the partners based on their capital balances. The aforementioned steps of the partnership liquidation process must be executed sequentially (Kimmel, Weygandt & Kieso, 2011). The other options available for partnership include placing the business under receivership where an administrative receiver is appointed to oversee the recovery process of the business in case of a limited liability partnership (Delaney & Whittington, 2005). In addition, the partners may decide to undertake an individual voluntary agreement with the creditors so that the secured creditors can be assured of their security enforcement before their final decision on forcing the partner into bankruptcy (Reeve, Warren & Duchac,