Dele and Seun who are in partnership, have decided to covert their business into a limited liability company where both become directors. To convert the bus...

Assessment: JAMB UTME - Principles of Accounts - 1999 Subject: Financial Accounting

Question 1 Report

Dele and Seun who are in partnership, have decided to covert their business into a limited liability company where both become directors. To convert the business?
Answer Details
Converting a partnership business into a limited liability company requires the formal ending of the partnership and the opening of new company books. This means that the partnership agreement is terminated, and the assets and liabilities of the partnership are transferred to the new company. Since both partners become directors of the new company, they will be shareholders and the shares will be allotted to them in agreed proportions. However, it is important to note that the process of converting a partnership into a limited liability company may require the computation of goodwill in accordance with legal requirements.
Read lesson note on Miscellaneous Accounts (WAEC)
Read lesson note on Partnership Accounts (JAMB)
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