1) What are The partnership agreement ?

Can be as informal as a handshake or as formal as a many-paged partnership agreement.

Should include the following items:
 Name of partnership and names of partners
 Type of business to be conducted and duration
 Initial capital contributions
 Complete specification of profit or loss distribution
 Procedures used for partnership changes
 Other aspects of operations

2: Types of Partnerships

General Partnerships
All partners have unlimited liability.
Creditors can go after the personal assets of any or all of the partners.

Limited Partnerships
Have at least one general partner and one or more limited partners.
General partner is personally liable for the partnership’s obligations and has management responsibility.
Limited partners are liable only to the extent of their capital contribution but do not have any management authority.
Typically use the equity method to account for their investments.

Limited Liability Partnerships (LLPs)

Each partner has some degree of liability shield.
No general or limited partners.
Partners are not personally liable for a partnership obligation.
Virtually all large public accounting firms are LLPs.

Limited Liability Limited Partnerships (LLLPs)

3: What are the procedures for forming a partnership in general partnership and LLP ?
Step one : choose a name

Step two : determine which state the register

Step 3 : management , investment and profits

Step four : draft a partnership agreement

Step five : employer identification number and bank account

Step six : legal help

4: How to make valuation to non cash asset invested by partners in partnership ?

Valuation of non cash asset invested by partners in the partnership are recorded at fair market value at the time of information of partnership and all
partners must agree to the value assign

5: What are the economic substance of admission ?

New partners are a primary source of additional capital or business expertise and the admission by approval of existing partners

the economic substance of admission

1: by admission there is a separate business entities

2: by admission there is cost advantage

3: by admission there is lower risk

4: by admission there is economic growth

5: by admission there is acquisition of intangible asset like goodwill

6: by admission there is additional capital and business expertise and that useful for economy

7: by admission there is investments and profit and that useful for economy

6: What are the difference between sole proprietorship and partnership ?

sole proprietorship : owned by one person for profit

partnership : is association of two or more persons to carry on as a co owners of business for profit

type proprietorship partnership

Business entity Yes Yes
Legal entity No No
Limited liability No No
Unlimited life No No
Business taxed No No
One owner allowed yes No

7: Discuss briefly, the main differences among accounting and law perspectives with regard to issues with short contrast between
Egypt and USA ?

In Egypt In America

 Separate entity. Egyptian commercial law: American commercial law:

Law point of view Consider partnerships a separate entity Consider partnerships as not separate entity

 Liability partnership Unlimited liability partnership Limited liability partnership (may be limited or
law point of view unlimited according to contract).

 Withdrawal of partner If withdrawal of partner (s) If withdrawal of partner (s)

law point of view
Accounting point of view
 The partnership stop (liquidated) and make
new contract.
If withdrawal of partner (s)
 The partnership will continue
 The partnership will continue
If withdrawal of partner (s)
 The partnership will continue or not
according the contract

 The priorities of payment for 1. Payment of creditors

liq. 2. Payment of loans from partners
law point of view
3. Payment of partners
4. Right of offest.

8: Difference between the law & accounting about (partners loans) ?

The law: on liq. Payment of partners' loans before payment of partner & capital account balance.

The accounting: does not matter (close partners' loan in his capital account).

9: Income-sharing Plans for LLP (if no explicit plan for sharing earnings, the law requires equal division)
‫خطط توزيع المكسب‬
 1. Equally, or in some other ratio.
2. In the ratio of the partners' capital account balances on a specific date, or in the ratio of average capital account balances during
the year.
3. Allowing interest on partners' capital account balances and dividing the remaining net income or loss in a specified ratio.
4. Allowing salaries to partners and dividing the resultant net income or loss in a stated ratio.
5. Bonus to managing partner based on income.
6. Allowing salaries and interest on capital account balances, and dividing the remaining net income or loss in a stated ratio.

10: What is the debate between accountants about admission new partner to the LLp?
There are two opinion of entry of new partner

1: revaluation of the company assets and determine the share of new partner ( more problems in this opinion )

2: registration partner’s share paid without regard to anything ( most accountant prefer this opinion )

11: What is the difference between the death of partner and the retirement of the partner ?
Death Of Partner
1: LLP contract often provide for life insurance policies on each others lives for settlement of estate of a decreased partners

2: A BUY and sell agreement may be formed by partners

Retirement of partner
1: the partner can sell his equity ( capital ) in the partnership to an existing partner or to new partner

2: if the amount received by a retiring partner differs from book value of his equity , the difference is recorded as

 Bonus to the retiring partner

 Bonus to the remaining partners