=+Question 3 (Based on ICAI, P2 Summer 2002)

Shamrock, Thistle and Leek are a partnership, sharing profits in the ratio 5:3:2 respectively, and are involved in the design of Gaelic theme pubs. STOUT Limited (‘STOUT’)

has decided to purchase the business at the end of its financial year (31 December 2001).

The balance sheet of the partnership as at that date is as follows:

€ €

Non-current Assets (net of depreciation)

Land & buildings Nie 260,000 Plant & equipment . 40,000 Motor vehicles (see Note (i)) 32,000 332,000 Current Assets Inventory (at cost) 61,000 Receivables 130,000 Cash at bank and in hand 2,500 193,500 525,500 Capital Accounts Shamrock 140,000 Thistle 80,000 Leek 77,000 297,000 Non-current liabilities (see Note (ii)) 59,500 Building loan 67,000 Other liabilities (see Note (i)) 102,500 169,500 525,500 36. ACCOUNTING FOR PARTNERSHIPS 793 Notes to the accounts:

(i) Other liabilities comprise:

€

Trade payables 48,000 Accrued expenses 12,500 VAT & PAYE 23,000 Bank loans:

Carl 8,000 Car 2 11,000 102,500