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Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 16 Partnerships: Liquidation.

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Presentation on theme: "Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 16 Partnerships: Liquidation."— Presentation transcript:

1 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 16 Partnerships: Liquidation

2 16-2 Learning Objective 1 Understand and explain terms associated with partnership liquidations.

3 16-3 Overview of Partnership Liquidations  The Uniform Partnership Act of 1997 includes seven sections which deal specifically with the dissolution and winding up of a partnership. Creditors have first claim to the partnership’s assets. After the creditors are fully satisfied, any remaining assets are distributed to the partners based on the balances in their capital accounts.

4 16-4 Overview of Partnership Liquidations  Dissociation The legal description of the withdrawal of a partner, including the following: 1.A partner’s death. 2.A partner’s voluntary withdrawal. 3.A judicial determination. Not all dissociations result in a partnership liquidation.

5 16-5 Overview of Partnership Liquidations  Dissolution The dissolving of a partnership Events that cause dissolution and winding up: 1.In a partnership at will, a partner’s express notice to leave the partnership. 2.In a partnership for a definite term or specific undertaking: a) When after a partner’s death or wrongful dissociation, at least half of the remaining partners decide to wind up the partnership business. b) When all of the partners agree to wind up the business. c) When the term or specific undertaking has expired or been completed.

6 16-6 Overview of Partnership Liquidations  Events that cause dissolution and winding up: An event that makes it unlawful to carry on a substantial part of the partnership business. A judicial determination.  On dissolution, the partnership begins the winding up of the partnership’s business.

7 16-7 Overview of Partnership Liquidations  Winding up and liquidation begins after the dissolution of the partnership. The partnership continues for the limited purpose of winding up the business and completing work in process. Winding up process includes the transactions necessary to liquidate the partnership. Some partnerships change to the liquidation basis of accounting once they no longer consider the business to be a going concern.

8 16-8 Overview of Partnership Liquidations  Loans to/from partners According to the UPA 1997, liabilities to partners for loans the partners made to the partnership generally have the same status as liabilities to the partnerships’ third party creditors. These loans have no priority for payment. Receivables from partners for loans or other advances made by the partnership to partners have the same status as other assets of the partnership.

9 16-9 Overview of Partnership Liquidations  Deficits in partners’ capital accounts Generally, a partner with a deficit in his or her capital account must make a contribution to the partnership to remedy that capital deficit. Liquidating distributions, in cash, are made to each partner with a capital credit balance. If a partner fails to remedy his or her capital deficit, all other partners must contribute, in the proportion to which those partners share partnership losses, the additional amount necessary to pay the partnership’s obligations.

10 16-10 Overview of Partnership Liquidations  Statement of partnership realization and liquidation May be prepared to guide and summarize the partnership liquidation process. Often called a “statement of liquidation.” It presents, in worksheet form, the effects of the liquidation on the partnership balance sheet accounts.

11 16-11 Practice Quiz Question #1 The difference between disassociation and dissolution is: a.Dissolution relates to adding a powder to a liquid. b.Disassociation relates to the withdrawal of a partner and dissolution relates to the winding up of a partnership. c.Dissolution relates to the dissolving of a partner’s personal assets. d.Dissolution relates to the withdrawal of a partner and disassociation relates to the winding up of a partnership. The difference between disassociation and dissolution is: a.Dissolution relates to adding a powder to a liquid. b.Disassociation relates to the withdrawal of a partner and dissolution relates to the winding up of a partnership. c.Dissolution relates to the dissolving of a partner’s personal assets. d.Dissolution relates to the withdrawal of a partner and disassociation relates to the winding up of a partnership.

12 16-12 Learning Objective 2 Make calculations related to lump-sum partnership liquidations.

13 16-13 The Liquidation Process 1.Non-cash assets converted to cash. 2.Creditors paid to the extent possible. 3.Remaining funds (if any) distributed to partners.

14 16-14 Group Exercise 1: Lump-sum Liquidation Partners Larry, Curly, and Moe share profits and losses in the ratio of 3:2:1, respectively. The partners voted to liquidate the partnership when its assets, liabilities, and capital were as follows: Cash$ 7,000Liabilities$24,000 Non-cash assets 90,000Loan, Larry 5,000 Loan, Moe 10,000 Capital, Larry 22,000 Capital, Curly 27,000 __________Capital, Moe 9,000 Total Assets$97,000Total Liabilities & Equity$97,000 Assume that all the noncash assets were sold for $42,000 and that all cash was distributed to outside creditors and partners. REQUIRED Prepare a statement of realization and liquidation.

15 16-15 Group Exercise 1: Lump-sum Liquidation Partners Larry, Curly, and Moe share profits and losses in the ratio of 3:2:1, respectively. The partners voted to liquidate the partnership when its assets, liabilities, and capital were as follows: Cash$ 7,000Liabilities$24,000 Non-cash assets 90,000Loan, Larry 5,000 Loan, Moe 10,000 Capital, Larry 22,000 Capital, Curly 27,000 __________ Capital, Moe 9,000 Total Assets$97,000Total Liabilities & Equity$97,000 Assume that all the noncash assets were sold for $42,000 and that all cash was distributed to outside creditors and partners. Priorities What to do with the loss on sale of non-cash assets? Pay outside debt. Pay inside debt. Distribute remainder to partners

16 16-16 Group Exercise 1: Solution Larry, Curly, and Moe Statement of Realization and Liquidation AssetsOutsidePartners' LoansPartners' Capital CashNoncashLiabilitiesLarryMoeLarryCurlyMoe Beginning Balance 7,000)90,000)(24,000)(5,000)(10,000)(22,000)(27,000)(9,000) Proceeds$42,000)  Book Value (90,000) Loss$(48,000) Larry (3/6) ($24,000) Curly (2/6) ($16,000) Moe (1/6) ($8,000)

17 16-17 Group Exercise 1: Solution Larry, Curly, and Moe Statement of Realization and Liquidation AssetsOutsidePartners' LoansPartners' Capital CashNoncashLiabilitiesLarryMoeLarryCurlyMoe Beginning Balance Asset sale & loss allocation Subtotal Right to setoff Outside Distributions Outside Loans Partners' Loans Partners' Capital Ending Balance

18 16-18 Sharing of Gains & Losses During Liquidation  Gains and losses incurred on the realization of noncash assets during liquidation are: allocated among the partners in the profit-and-loss sharing ratio (such as 4:3:1). unless agreed to otherwise by the partners.

19 16-19 Consequences of a Partner Being Personally Insolvent  A partner having a capital account deficit may be able to eliminate the deficit by capital contribution. setoff (against loans to the partnership).  A deficit that cannot be eliminated is allocated to the remaining partners who have positive capital balances (using their P/L sharing ratio).

20 16-20 Consequences of a Partner Being Personally Insolvent  A partner that winds up absorbing some or all of another partner’s capital deficit has legal recourse against that partner. because that partner has broken the terms of the partnership agreement.

21 16-21 Sharing Profits and Losses: In The Ratio of Capital Balances  Sharing profits and losses in the ratio of capital balances is one of the most important safeguards used in partnership agreements. results in no partner ever having a capital account deficit balance until the losses incurred in liquidation exceed the total partnership capital. Thus, all partners go into a deficit position simultaneously.

22 16-22 The Rule of Setoff A deficit balance in a partner’s capital account can be eliminated to the extent that such partner has a loan to the partnership. Note Payable to Jones Capital, Jones Balances before setoff $30,000)$(11,000) Apply rule of setoff (11,000)11,000) Balances after setoff $19,000)$0)

23 16-23 How to Know You’ve Done it Right? If you allocate losses correctly, the remaining cash balances at the end should be exactly enough to pay back partners’ capital balances. = Capital

24 16-24 Group Exercise 2: Lump-sum Liquidation— Insolvent Partners Huey, Dewey, and Louie share profits and losses in the ratio of 3:3:2, respectively. The partners voted to liquidate the partnership when its assets, liabilities, and capital were as follows: Cash$ 2,000Liabilities$35,000 NR from Louie 4,000Loan, Dewey 17,000 Non-cash assets 82,000 Capital, Huey 11,000 Capital, Dewey13,000 Capital, Louie 12,000 Total Assets$88,000Total Liabilities & Equity$88,000 All the noncash assets of $82,000 were sold for $46,000. Louie was personally insolvent and unable to contribute any cash. Huey and Dewey were both personally solvent and able to eliminate any deficits in their capital accounts through setoff or contribution. All cash was distributed to outside creditors and partners. REQUIRED Prepare a statement of realization and liquidation.

25 16-25 Huey, Dewey, and Louie Statement of Realization and Liquidation AssetsOutsidePart LoanPartners' Capital CashNoncashLiabilitiesDeweyHueyDeweyLouie Beginning Balance2,000)86,000(35,000)(17,000)(11,000)(13,000)(12,000) Group Exercise 2: Solution

26 16-26 Huey, Dewey, and Louie Statement of Realization and Liquidation AssetsOutsidePart LoanPartners' Capital CashNoncashLiabilitiesDeweyHueyDeweyLouie Beginning Balance2,000)86,000(35,000)(17,000)(11,000)(13,000)(12,000) NR Write-off(4,000)4,000) Group Exercise 2: Solution Proceeds$46,000)  Book Value (82,000) Loss$(36,000) Huey (3/8) ($13,500) Dewey (3/8) ($13,500) Louie (2/8) ($9,000)

27 16-27 Huey, Dewey, and Louie Statement of Realization and Liquidation AssetsOutsidePart LoanPartners' Capital CashNoncashLiabilitiesDeweyHueyDeweyLouie Beginning Balance NR Write-off Asset sale & loss allocation Subtotal Write off Louie Subtotal Right to setoff Huey contribution Outside Distributions Outside Loans Partners' Loans Ending Balance Group Exercise 2: Solution

28 16-28 Practice Quiz Question #2 Which of the following statements is true about a lump-sum partnership liquidation? a.Lump-sum liquidations take place over an extended period of time. b.Lump-sum liquidations can only take place when the partnership has two partners. c.Lump-sum liquidations relate mainly to corporations. d.Lump-sum liquidations take place all at once or over a short period of time. Which of the following statements is true about a lump-sum partnership liquidation? a.Lump-sum liquidations take place over an extended period of time. b.Lump-sum liquidations can only take place when the partnership has two partners. c.Lump-sum liquidations relate mainly to corporations. d.Lump-sum liquidations take place all at once or over a short period of time.

29 16-29 Learning Objective 3 Make calculations related to installment partnership liquidations.

30 16-30 Installment Liquidations: Priority In Distributing Cash  What is an installment liquidation? Assets are sold over time. Cash is distributed throughout the liquidation process. Who gets priority in each round?  No cash distributions are made to partners until outside creditors have been paid in full. This holds true for both: Lump-sum liquidations. Installment liquidations.

31 16-31 The Statement of Realization and Liquidation  The statement of realization and liquidation is an historical statement. portrays what actually happened in the past (during the liquidation process). is usually prepared in a lump-sum liquidation (or as a “look back” at an installment liquidation).

32 16-32 The Schedule of Safe Payments  The schedule of safe payment is a pro forma (what if) statement for installment liquidations. portrays what could happen in the future—on a worst-case basis.  Must prepare a new schedule for each $ distribution

33 16-33 Cash Distribution Plan  The cash distribution plan is a pro forma (what if) statement for installment liquidations. is only prepared once at the beginning of the winding up process.

34 16-34 Installment Liquidations: “Inside” versus “Outside” Loans  Some people seem to have a “fixation” on “equality” between “inside” and “outside” debt. Strictly speaking, the UPA of 1997 says they are equal. In practice, partners frequently need to subordinate their debt to existing “outside” debt. We will assume subordination in all in-class examples.  It makes sense to make payments in the following order: Outside debt Inside debt Capital  However, this order can result in inequities. Partner gets payment for loan and spends it. Partner can’t make up deficit balance. Other partners have to cover the deficit.  The legal doctrine of setoff effectively treats loans as additional capital investments to avoid inequities.

35 16-35 Thoughts on Installment Liquidations  Don’t sell everything at once … BE PATIENT!  You can’t just start handing out cash!  You need a plan to ensure FAIRNESS!  Two types of “plans” for distributing cash: 1.Cash Distribution Plan (beginning of the process) 2.Schedule of Safe Payments (with each distribution)  Ensures that no one gets too much cash too soon.

36 16-36 Group Exercise 3: Distributing Available $ to Partners The partnership of Snap, Crackle, and Pop is in the process of being liquidated. The trial balance immediately after the sale of a portion of the noncash assets and full payment to outside creditors is as follows: Cash$27,000 NR from Crackle 13,000 Non-cash assets 42,000 Loan, Snap $12,000 Capital, Snap 10,000 Capital, Crackle 19,000 Capital, Pop__________ 41,000 Totals$82,000$82,000 Snap wants the available cash distributed to her to pay off her loan—she cites Section 807 of the UPA, which states that partners’ loans have priority over partners’ capital. Pop wants the cash distributed to him because he has the largest capital investment. Crackle believes that it should be distributed equally, which is how profits and losses are shared. REQUIRED 1.Evaluate the position of each partner. 2.Who should receive the $27,000 available cash? 3.Optional: If subsequent to the cash distribution of $27,000, noncash assets having a book value of $30,000 are sold for $9,000, who receives the $9,000?

37 16-37 Group Exercise 3: Solution PART 1  Snap quotes the UPA properly but does not consider the rule of setoff, which essentially treats a partner’s loan as a capital contribution in determining how cash should be distributed to partners.  Pop’s position indirectly states that he is most able to bear losses and the cash should be distributed considering this ability. This general approach is used in distributing cash to partners.  Crackle’s position is without merit. The distribution of cash in liquidation is not related to the manner of sharing profits and losses.

38 16-38 Schedule of Safe Payments  No cash to partners until AFTER all outside creditors are paid in full.  Before any cash goes to the partners, consider two hypothetical worst-case scenarios. All non-cash assets worthless (distribute losses) Assume partners absorb any deficits  Cash only goes to partners with positive balances. It means they have enough excess invested to absorb even the worst possible scenarios!

39 16-39 Group Exercise 3 Continued: Schedule of Safe Payments The partnership of Snap, Crackle, and Pop is in the process of being liquidated. The trial balance immediately after the sale of a portion of the noncash assets and full payment to outside creditors is as follows: Cash$27,000 NR from Crackle 13,000 Non-cash assets 42,000 Loan, Snap $12,000 Capital, Snap 10,000 Capital, Crackle 19,000 Capital, Pop__________ 41,000 Totals$82,000$82,000 Snap wants the available cash distributed to her to pay off her loan—she cites Section 807 of the UPA, which states that partners’ loans have priority over partners’ capital. Pop wants the cash distributed to him because he has the largest capital investment. Crackle believes that it should be distributed equally, which is how profits and losses are shared. REQUIRED 1.Evaluate the position of each partner. 2.Who should receive the $27,000 available cash? 3.Optional: If subsequent to the cash distribution of $27,000, noncash assets having a book value of $30,000 are sold for $9,000, who receives the $9,000?

40 16-40 Group Exercise 3: Solution PART 2  The two worst-case assumptions are needed to determine who gets the cash. A schedule of safe payments follows: Schedule of Safe Payments to Partners Partner SnapCracklePop Preliquidation loan balance Preliquidation capital balance Preliquidation loan from partnership First worst-case assumption: Assume full loss of all non-cash assets Subtotal Second worst-case assumption: Assume Crackle's deficit is absorbed by other partners Cash to be distributed to Snap and Pop

41 16-41 Group Exercise 3 Continued: Schedule of Safe Payments The partnership of Snap, Crackle, and Pop is in the process of being liquidated. The trial balance immediately after the sale of a portion of the noncash assets and full payment to outside creditors is as follows: Cash$27,000 NR from Crackle 13,000 Non-cash assets 42,000 Loan, Snap $12,000 Capital, Snap 10,000 Capital, Crackle 19,000 Capital, Pop__________ 41,000 Totals$82,000$82,000 Snap wants the available cash distributed to her to pay off her loan—she cites Section 807 of the UPA, which states that partners’ loans have priority over partners’ capital. Pop wants the cash distributed to him because he has the largest capital investment. Crackle believes that it should be distributed equally, which is how profits and losses are shared. REQUIRED 1.Evaluate the position of each partner. 2.Who should receive the $27,000 available cash? 3.Optional: If subsequent to the cash distribution of $27,000, noncash assets having a book value of $30,000 are sold for $9,000, who receives the $9,000? Proceeds$9,000)  Book Value (30,000) Loss$(21,000)

42 16-42 Group Exercise 3: Solution PART 3 Snap CracklePop LoanCapital Beginning Balances $12,000)$10,000)$19,000)$41,000) First Cash Distribution Updated Balances Allocation of loss on sale Updated Balances

43 16-43 Group Exercise 3: Solution PART 3 Schedule of Safe Payments to Partners  Beginning Balances are after the above cash distribution of $27,000 and after the $21,000 loss on the sale of noncash assets for $9,000. Schedule of Safe Payments to Partners Partner SnapCracklePop Preliquidation loan balance Preliquidation capital balance Preliquidation loan from partnership First worst-case assumption: Assume full loss of all non-cash assets Subtotal Second worst-case assumption: Assume Crackle's deficit is absorbed by other partners Cash to be distributed to Snap and Pop

44 16-44 Installment Liquidations: Different Strokes For Different Folks  The amount to be distributed to each partner at any point in time can be determined by preparing either of the following items: Schedules of safe payments at each cash distribution date. Will have to be done several times. A cash distribution plan at the beginning of the liquidation process. Need be done only once.

45 16-45 Installment Liquidations  The effect of distributing cash to partners based on either (a) schedules of safe payments or (b) cash distribution plans is to bring the capital balances into the profit-and-loss sharing ratio.

46 16-46 Installment Liquidations: Loss Absorption Potential  Conceptually, the first cash distribution to partners goes to that partner who has the highest loss absorption potential (LAP). This is not necessarily the partner who has the highest capital balance.

47 16-47 Installment Liquidations: Loss Absorption Potential—Calculating  The loss absorption potential (LAP) of each partner is calculated by dividing the partner’s capital balance by his or her profit-and-loss sharing percentage. Capital balance, Jones$80,000 = $400,000 Jones’ P/L sharing percentage20% Loss Absorption Potential

48 16-48 Installment Liquidations: Loss Absorption Potential—Loans “To”  In calculating a partner’s loss absorption potential, a partner’s loan to the partnership is added to the partner’s capital balance. Capital balance, Jones$80,000 PLUS Note payable to Jones 10,000 Total$90,000 = $450,000 Jones’ P/L sharing percentage20% Loss Absorption Potential

49 16-49 Installment Liquidations: Loss Absorption Potential—Loans “From”  In calculating a partner’s loss absorption potential, a partner’s loan from the partnership is subtracted from the partner’s capital balance. Capital balance, Jones$80,000 MINUS Note payable from Jones (5,000) Total$75,000 = $375,000 Jones’ P/L sharing percentage20% Loss Absorption Potential

50 16-50 Installment Liquidations: Loss Absorption Potential—Implications  Consequences of Having the Highest Loss Absorption Potential: He or she will be: The first partner to receive cash. The partner that could suffer the greatest inequity in relation to his or her capital balance. It is NOT a good thing to have the highest loss absorption potential.

51 16-51 Group Practice: Loss Absorption Potential The partnership of Snap, Crackle, and Pop is in the process of being liquidated. The trial balance immediately after the sale of a portion of the noncash assets and full payment to outside creditors is as follows: Cash$27,000 NR from Crackle 13,000 Non-cash assets 42,000 Loan, Snap $12,000 Capital, Snap 10,000 Capital, Crackle 19,000 Capital, Pop__________ 41,000 Totals$82,000$82,000 REQUIRED  Calculate the loss absorption potential for Snap, Crackle, and Pop.

52 16-52 Group Practice: Loss Absorption Potential SnapCracklePop Capital $10,000)$19,000)$41,000) Loan to (from) partnership Profit/loss sharing ratio Loss absorption potential Based on these calculations, who should receive cash first?

53 16-53 Practice Quiz Question #3 In liquidation, cash distributions to partners are determined based on: a.Who has the highest capital balance. b.How profits and losses are shared. c.Partners’ loans to the partnership having priority over partners’ capital balances. d.The marshalling of assets principle. e.The rule of setoff. f.None of the above. In liquidation, cash distributions to partners are determined based on: a.Who has the highest capital balance. b.How profits and losses are shared. c.Partners’ loans to the partnership having priority over partners’ capital balances. d.The marshalling of assets principle. e.The rule of setoff. f.None of the above.

54 16-54 Group Exercise 3 Continued: Cash Distribution Plan The partnership of Snap, Crackle, and Pop is in the process of being liquidated. The trial balance immediately after the sale of a portion of the noncash assets and full payment to outside creditors is as follows: Cash$27,000 NR from Crackle 13,000 Non-cash assets 42,000 Loan, Snap 12,000 Capital, Snap 10,000 Capital, Crackle 19,000 Capital, Pop__________ 41,000 Totals$82,000$82,000 Snap wants the available cash distributed to her to pay off her loan—she cites Section 807 of the UPA, which states that partners’ loans have priority over partners’ capital. Pop wants the cash distributed to him because he has the largest capital investment. Crackle believes that it should be distributed equally, which is how profits and losses are shared. REQUIRED 1.Evaluate the position of each partner. 2.Who should receive the $27,000 available cash? 3.Optional: If subsequent to the cash distribution of $27,000, noncash assets having a book value of $30,000 are sold for $9,000, who receives the $9,000?

55 16-55 Cash Distribution Plan: Snap, Crackle, and Pop Cash Distribution Plan Loss Absorption PotentialSnap CracklePop SnapCracklePopLoanCapital 12,00010,0006,00041,000 ) Loss absorption potential 66,00018,000123,000 Cash distributed to Pop Cash distributed to Pop/ Snap First $27,000 Distribution SnapPop$ 27,000) Next $9,000 Distribution SnapPop$ 9,000) Priorities:

56 16-56 Group Exercise 4: Installment Liquidation Partners Potter, Granger, and Weasley share profits and losses in the ratio 2:1:1, respectively. The partners voted to liquidate the partnership when its assets, liabilities, and capital were as follows: Cash$ 25,000 NR from Potter 15,000 Other assets 210,000 Liabilities $ 70,000 Loan, Granger 18,000 Capital, Potter44,000 Capital, Granger 10,000 Capital, Weasley__________ 108,000 Totals$250,000$250,000 The partnership will be liquidated over a long period of time. Cash will be distributed to the partners as it becomes available. The first sale of noncash assets having a book value of $110,000 realized $80,000. REQUIRED  Determine how the available cash should be distributed to the partners after this first sale.

57 16-57 Group Exercise 4: Schedule of Safe Payments Step 2: Payment of Outside Liabilities Original cash on hand + Sale proceeds Total cash available for debt payment  Payment of outside liabilities Cash available for distribution to partners Step 1: Sale of Non-cash Assets Proceeds  Book Value, non-cash assets sold Realized loss Remaining non-cash assets

58 16-58 Group Exercise 4: Schedule of Safe Payments Step 3: Update Capital Balances PotterGrangerWeasley Original balance44,000)10,000)108,000)  Loss allocation from asset sale Updated Balance

59 16-59 Group Exercise 4: Schedule of Safe Payments Schedule of Safe Payments to Partners PotterGrangerWeasley Loan to partnership Pre-distribution capital balance Loan from partnership Equivalent Capital First worst-case assumption: Assume full loss of all non-cash assets Subtotal Second worst-case assumption: Assume deficits are absorbed by Weasley Cash to be distributed to Weasley

60 16-60 Group Practice: Loss Absorption Potential PotterGrangerWeasley Capital $44,000)$10,000)$108,000) Loan to (from) partnership Profit/loss sharing ratio Loss absorption potential Based on these calculations, who should receive cash first?

61 16-61 Group Exercise 4: Cash Distribution Pl Cash Distribution Plan 50%25% Loss Absorption PotentialGrangerPotterGrangerWeasley PotterGrangerWeasleyLoanCapital 18,00029,00010,000108,000 ) Loss absorption potential 58,000112,000432,000 Cash distributed to Weasley and Granger First $35,000 Distribution PotterGrangerWeasley$ 35,000) Priorities:

62 16-62 Practice Quiz Question #4 Which of the following is NOT true about the schedule of safe payments and cash distribution plans? a.Cash distribution plans are prepared multiple times during the liquidation as cash comes in. b.Cash distribution plans are prepared at the beginning of the liquidation. c.Schedules of safe payments are prepared multiple times during the liquidation as cash comes in. d.The allocation of assets to partners is the same under the cash distribution plan and schedule of safe payments. Which of the following is NOT true about the schedule of safe payments and cash distribution plans? a.Cash distribution plans are prepared multiple times during the liquidation as cash comes in. b.Cash distribution plans are prepared at the beginning of the liquidation. c.Schedules of safe payments are prepared multiple times during the liquidation as cash comes in. d.The allocation of assets to partners is the same under the cash distribution plan and schedule of safe payments.

63 Conclusion The End 16-63


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