Partnership dissolution

• Formation of new partnership also known as dissolution
• Liquidation- termination of the business activities carried on by the partnership
• Admission by purchase- buying the interest of old partner
• Admission by investment- where asset are contributed to the partnership
• Agreed capital- Amount of new capital set by the partners from the partnership which need not necessarily equal to contributed capital
• total contributed capital- investment of all partners both and old, sum of the capital balance of old partner
• Bonus- transfer of capital from one partner to another
• Asset revaluation- necessary adjustment in asset values upon admission of a new partner
• Capital credit - Interest or equity of partner in the firm
• Bonus method- The agreed capitalization of new partnership is equal to the total amount of contribution of all the partners both old and new
• Partnership dissolution- A change in the relation of the partners caused by any partner ceasing to be associated in the carrying out of the business