MISAMIS UNIVERSITY Prepared by: Document Code: Module Reference No.

Ozamiz City Wilnirose C. Malinao

Office of the Vice President Faculty
for Academic Affairs

COLLEGE OF BUSINESS AND

MANAGEMENT Checked by: Revision Date: Units:
Rosemarie P. Duhaylungsod June 24, 2020 3.0
Program Chairman
LEARNING Reviewed by: Revision No.: Subject Code:
MODULE Efren Barillo 0 Advanced Acc.
Dean
Approved by: Prerequisite: Co-requisite:
Geraldine Durias none None
VPAA/Director for Instruction
Descriptive Title: Accounting for Special Transactions

Module 1.4

PERFORMING ACCOUNTING PROCEDURES FOR PARTNERSHIP LIQUIDATION.

I. Course Outcome : Prepare the financial reports relating to partnership formation,

operation and liquidation, and corporate liquidation and
reorganization
II. Learning Outcome/s : Performing accounting procedures for partnership liquidation.
III. Time Frame : 7.5 Hours
IV. Introduction :

 Chapter 4 - Partnership Liquidation

Learning Objectives
• State the order of priorities in cases of liquidation.
• Account for the liquidation of a partnership.

Liquidation is the termination of business operations or the winding up of affairs. It is a process

by which
a. the assets of the business are converted into cash,
b. the liabilities of the business are settled, and
c. any remaining amount is distributed to the owners.

Methods of liquidation
1. Lump-sum liquidation – the partners’ claims are settled in a single, lump-sum payment
after all non-cash assets are realized and after all liabilities are settled.
2. Installment liquidation – the partners’ claims are settled on an installment basis as non-
cash assets are realized and as cash becomes available, but only after all liabilities are
fully settled.

Settlement of claims
• The available cash of the partnership is used to settle claims in the following descending
order:
1. First, to outside creditors;
2. Second, to inside creditors (e.g., payables to partners);
3. Third, to owners’ interests

Lump-sum vs. Installment liquidation

The following procedures shall be observed when accounting for lump-sum liquidation or
installment liquidation:
 MISAMIS UNIVERSITY Prepared by: Document Code: Module Reference No.
Ozamiz City Wilnirose C. Malinao
Office of the Vice President Faculty
for Academic Affairs

COLLEGE OF BUSINESS AND

MANAGEMENT Checked by: Revision Date: Units:
Rosemarie P. Duhaylungsod June 24, 2020 3.0
Program Chairman
LEARNING Reviewed by: Revision No.: Subject Code:
MODULE Efren Barillo 0 Advanced Acc.
Dean
Approved by: Prerequisite: Co-requisite:
Geraldine Durias none None
VPAA/Director for Instruction
Descriptive Title: Accounting for Special Transactions

Marshalling of assets
A partner who is solvent, shall be required to make additional contributions to settle any
deficiency in his capital balance, subject to the following order of priority over his personal
assets:
1. The partner’s separate creditors
2. The partnership creditors
3. To the other partners by way of contribution
4. The capital deficiency of an insolvent partner shall be offset to the capital credits
of the other partners.
 MISAMIS UNIVERSITY Prepared by: Document Code: Module Reference No.
Ozamiz City Wilnirose C. Malinao
Office of the Vice President Faculty
for Academic Affairs

COLLEGE OF BUSINESS AND

MANAGEMENT Checked by: Revision Date: Units:
Rosemarie P. Duhaylungsod June 24, 2020 3.0
Program Chairman
LEARNING Reviewed by: Revision No.: Subject Code:
MODULE Efren Barillo 0 Advanced Acc.
Dean
Approved by: Prerequisite: Co-requisite:
Geraldine Durias none None
VPAA/Director for Instruction
Descriptive Title: Accounting for Special Transactions

V. Learning Materials : 1.Book: Accounting for Special Transactions, 2020 edition by

Millan, Chapter 4: Partnership Liquidation

2. Powerpoint
Filename: Lump-Sum Liquidation.pptx

2. pdf document
Filename : Installment Liquidation.pdf

3. Video
Video Links :
https://www.youtube.com/watch?v=h2JlOKSRuHg
https://www.youtube.com/watch?v=EVHuBKJM6Ns

3. Writing Materials: Pen and paper

VI. Supplementary
Learning Resources : A. Books
Pedro P. Guerrero and Jose F. Peralta. Advanced Accounting
Principles and Procedural Applications vol. 1, 2017 edition

Susan Ballada, CPA and Win Ballada, CPA, MBA. Partnership

and Corporation Accounting.

Rafael Lopez Jr., CPA. Accounting for Partnership and

Corporation.

Robert A. Demafiles, MBA, CAT, CPA. Accounting for

Partnership and Corporations, 2015 edition.

B. Online
Advanced Accounting
highered.mheducation.com/sites/0078136628/student_view0/

Wiley: Advanced Accounting

www.wiley.com

Advanced Accounting - School of Continuing Studies

sps.northwestern.edu/program-areas/.../advanced-
accounting/index.php

VII. Learning Activities :

1. Virtual class discussion on partnership liquidation in
lump-sum method.
 MISAMIS UNIVERSITY Prepared by: Document Code: Module Reference No.
Ozamiz City Wilnirose C. Malinao
Office of the Vice President Faculty
for Academic Affairs

COLLEGE OF BUSINESS AND

MANAGEMENT Checked by: Revision Date: Units:
Rosemarie P. Duhaylungsod June 24, 2020 3.0
Program Chairman
LEARNING Reviewed by: Revision No.: Subject Code:
MODULE Efren Barillo 0 Advanced Acc.
Dean
Approved by: Prerequisite: Co-requisite:
Geraldine Durias none None
VPAA/Director for Instruction
Descriptive Title: Accounting for Special Transactions

2. Watch the video link for the additional discussion on

lump-sum liquidation https://www.youtube.com/watch?
v=h2JlOKSRuHg

3. Answer Activity 1.4.1.

4. Read and understand Chapter 4: Partnership Liquidation,
the installment method part.
5. You can also read the attached pdf file, filename:
Installment Liquidation.pdf
6. Watch the video link for better understanding of the
chapter.
https://www.youtube.com/watch?v=EVHuBKJM6Ns
7. Answer Activity 1.4.2
8. Virtual class discussion on the answers for Activity 1.4.2.
9. Answer Activity 1.4.3 (the quiz is all about partnership
liquidation: lump-sum and installment)

VIII. Equipment : None

IX. Student Feedback : Your feedback is important. Please don’t leave this blank. This
portion will allow us to evaluate how this module is going. Your
feedback will help improve this module for future revision.

1. Which part of this module you found interesting? Why?

2. Which part of this module you considered challenging? Why?