QUESTION 1

Which one of the following alternatives is correct?

• A.

  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.

• B.

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

• C.

  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.

• D.

  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.

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

QUESTION 2

Which one of the following alternatives is correct?

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

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

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

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

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