Q1 Which one of the following alternatives is correct a Since a partnership is a legal entity, the ownership of a partnership is vested in the partners, and not in the partnership b Since partnerships are not governed by a law requiring that IFRS be applied, it is not possible to introduce a standardised accounting procedure according to which changes in the ownership structure of partnerships ought to be recorded c From the legal perspective, the activities of a dissolved and a subsequent new partnership are not separately accounted for and reported on d When a change in the ownership structure of a partnership occurs, a new partnership agreement is entered into by the new partners which causes the existing partnership to continue with its business operations without any interruptions e The retirement of a partner from a partnership does not require the calculation of a new profit sharing ratio but a simple reallocation of a retired partners share Q2 Which one of the following alternatives is correct a The selling price of the partnership business is determined by the value of its assets b When recording the valuation adjustments, if the value of a liability is decreased, the valuation account credited with the amount of a decrease c To ensure that compliance is followed, the financial statements of partnerships must be prepared according to IFRS d The fair value of the assets of a partnership is equal to the total equity of a partnership e An existing goodwill account balance is transferred to the partners capital accounts on admission of a new partner Q3 Which one of the following alternatives is incorrect a The selling price of the partnership business is determined by the value of its assets b To ensure that compliance is followed, the financial statements of partnerships must be prepared according to IFRS c An existing goodwill account balance is transferred to the partners capital accounts on admission of a new partner d The change in the ownership structure of the partnership is effectively the same as the dissolution e When recording the valuation adjustments, if the value of a liability is decreased, the valuation account credited with the amount of a decrease Q4 A change in the ownership structure of the partnership occurs 1 When the partnership changes to operate in a completely new industry or market 2 When a new partner is admitted to the partnership 3 When one of the partners dies 4 When one of the partners retires 5 When a new profit sharing ratio of the partnership is agreed upon and effected Which one of the following alternatives form part of the instances of a changes in the partnership ownership structure a 1, 3, 4 and 5 b 1, 2, 3 and 5 c 1, 2, 4 and 5 d 2, 3, 4 and 5 e 1, 2, 3 and 4 f All of the above Q5 Which one of the following alternatives is correct regarding the revaluation surplus in a partnership when there is a change in ownership a The revaluation surplus forms part of the equity of the partners and must allocated to the capital accounts of the existing partners in their new profit sharing ratio b The revaluation surplus forms part of the equity of the partners and must allocated to the current accounts of the existing partners in their existing profit sharing ratio c The revaluation surplus forms part of the equity of the partners and will always be added to the current accounts of the existing partners with a debit balance d The revaluation surplus forms part of the equity of the partners and must allocated to the capital accounts of the existing partners in their existing profit sharing ratio e The revaluation surplus forms part of the equity of the partners and must allocated to the current accounts of the existing partners in their new profit sharing ratio f The revaluation surplus forms part of the liabilities of the partnership and must allocated to reduce the capital accounts of the existing partners in their existing profit sharing ratio Q6 Given the following information for the four questions below Mpiyakhe and Phumasilwe are in the business of water purification and supply in a form of a partnership trading as Mhlathuze Water The partners are sharing profits and losses equally On 30 July 2022 the following information was extracted from the accounting records of the partnership EXTRACT OF GIVEN INFORMATION FOR MHLATHUZE WATER R Current account Mpiyakhe (Dr) 39 700 Current account Phumasilwe (Dr) 24 800 Capital Mpiyakhe 108 900 Capital Phumasilwe 96 500 Additional information Mpiyakhe and Phumasilwe decided to admit Dlame from 1 August 2022 Dlame will contribute the following to acquire a fifth of the net asset share of the partnership Cash R18 300 Purification equipment worth R49 800 Mpiyakhe and Phumasilwe agreed to relinquish 20 of their share in profits or losses to Dlame in the ratio of 3 1 respectively All other assets were revalued before admitting Dlame to the partnership A valuation loss was correctly calculated at R37 700 Which one of the following alternatives represents the new profit sharing ratio after the admission of Dlame into the new partnership a 2 2 1 b 2 3 1 c 2 1 2 d 3 2 1 Q7 Which one of the following alternatives represents the correct balance in the capital account of Mpiyakhe after the valuation of assets and prior to the admission of Dlame a R 69 200 b R 148 600 c R 50 350 d R 167 450 Q8 Which one of the following alternatives represents the correct balance in the capital account of Phumasilwe after the valuation of assets and prior to the admission of Dlame a R 140 150 b R 52 850 c R 50 350 d R 71 700 Q9 Which one of the following alternatives represents the correct amount of goodwill in the accounting records of Mhlathuze Water after the admission of Dlame a R 273 000 b R 169 000 c R 169 200 d R 273 300

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Q1 Which one of the following alternatives is correct? a. Since a partnership is a legal entity, the ownership of a partnership is vested in

Which one of the following alternatives is correct?

Since a partnership is a legal entity, the ownership of a partnership is vested in the partners, and not in the partnership.

Since partnerships are not governed by a law requiring that IFRS be applied, it is not possible to introduce a standardised accounting procedure according to which changes in the ownership structure of partnerships ought to be recorded.

From the legal perspective, the activities of a dissolved and a subsequent new partnership are not separately accounted for and reported on.

When a change in the ownership structure of a partnership occurs, a new partnership agreement is entered into by the new partners which causes the existing partnership to continue with its business operations without any interruptions.

The retirement of a partner from a partnership does not require the calculation of a new profit-sharing ratio but a simple reallocation of a retired partners share.

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Which one of the following alternatives is correct?

The selling price of the partnership business is determined by the value of its assets.

When recording the valuation adjustments, if the value of a liability is decreased, the valuation account credited with the amount of a decrease.

To ensure that compliance is followed, the financial statements of partnerships must be prepared according to IFRS.

The fair value of the assets of a partnership is equal to the total equity of a partnership.

An existing goodwill account balance is transferred to the partners capital accounts on admission of a new partner.

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Which one of the following alternatives is incorrect?

The selling price of the partnership business is determined by the value of its assets.

To ensure that compliance is followed, the financial statements of partnerships must be prepared according to IFRS.

An existing goodwill account balance is transferred to the partners capital accounts on admission of a new partner.

The change in the ownership structure of the partnership is effectively the same as the dissolution.

When recording the valuation adjustments, if the value of a liability is decreased, the valuation account credited with the amount of a decrease.

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A change in the ownership structure of the partnership occurs: 1. When the partnership changes to operate in a completely new industry or market. 2. When a new partner is admitted to the partnership. 3. When one of the partners dies. 4. When one of the partners retires. 5. When a new profit-sharing ratio of the partnership is agreed upon and effected. Which one of the following alternatives form part of the instances of a changes in the partnership ownership structure?

1, 3, 4 and 5

1, 2, 3 and 5

1, 2, 4 and 5

2, 3, 4 and 5

1, 2, 3 and 4

All of the above

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Which one of the following alternatives is correct regarding the revaluation surplus in a partnership when there is a change in ownership?

The revaluation surplus forms part of the equity of the partners and must allocated to the capital accounts of the existing partners in their new profit-sharing ratio.

The revaluation surplus forms part of the equity of the partners and must allocated to the current accounts of the existing partners in their existing profit-sharing ratio.

The revaluation surplus forms part of the equity of the partners and will always be added to the current accounts of the existing partners with a debit balance.

The revaluation surplus forms part of the equity of the partners and must allocated to the capital accounts of the existing partners in their existing profit-sharing ratio.

The revaluation surplus forms part of the equity of the partners and must allocated to the current accounts of the existing partners in their new profit-sharing ratio.

The revaluation surplus forms part of the liabilities of the partnership and must allocated to reduce the capital accounts of the existing partners in their existing profit-sharing ratio.

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Given the following information for the four questions below:

Mpiyakhe and Phumasilwe are in the business of water purification and supply in a form of a partnership trading as Mhlathuze Water. The partners are sharing profits and losses equally.

On 30 July 2022 the following information was extracted from the accounting records of the partnership:

EXTRACT OF GIVEN INFORMATION FOR MHLATHUZE WATER
	R
Current account - Mpiyakhe (Dr)................................	39 700
Current account - Phumasilwe (Dr)...........................	24 800
Capital - Mpiyakhe.......................................................	108 900
Capital - Phumasilwe..................................................	96 500

Additional information

Mpiyakhe and Phumasilwe decided to admit Dlame from 1 August 2022.

Dlame will contribute the following to acquire a fifth of the net asset share of the partnership:

Cash........................................................................R18 300

Purification equipment worth..................................R49 800

Mpiyakhe and Phumasilwe agreed to relinquish 20% of their share in profits or losses to Dlame in the ratio of 3:1 respectively.

All other assets were revalued before admitting Dlame to the partnership.

A valuation loss was correctly calculated at R37 700

Which one of the following alternatives represents the new profit-sharing ratio after the admission of Dlame into the new partnership?

2 : 2 : 1

2 : 3 : 1

2 : 1 : 2

3 : 2 : 1

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Which one of the following alternatives represents the correct balance in the capital account of Mpiyakhe after the valuation of assets and prior to the admission of Dlame?

R 69 200

R 148 600

R 50 350

R 167 450

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Which one of the following alternatives represents the correct balance in the capital account of Phumasilwe after the valuation of assets and prior to the admission of Dlame?

R 140 150

R 52 850

R 50 350

R 71 700

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Which one of the following alternatives represents the correct amount of goodwill in the accounting records of Mhlathuze Water after the admission of Dlame?

R 273 000

R 169 000

R 169 200

R 273 300

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