1. The cash realised by selling assets is distributed chronologically as under:
- Dissolution expense
- Third party liabilities
- Loan of Partners
- Partners capital and current account balance
- If any surplus remains after paying all of the above then the amount is distributed among partners in their profit-loss sharing ratio.
2. If the value of tangible assets is not given then it should be assumed that they have been realised at their book value.
3. If the value of intangible assets like goodwill, patents trademark etc. is not given, then it should be assumed that they have realised no money and no accounting effect of it should be given.
4. If information regarding payment of any liabilities is not given then it should be assumed that it has been paid at its book value.
5. Partners wife’s loan is repaid along with other third party liabilities.
6. If there are not sufficient funds to pay the partners loans then in the proportion of loan amount, payment is done.
7. Generally dissolution expense are borne by partnership firm.
8. If any unrecorded asset is given towards payment of any liability, then in that case what-ever amount remains to be paid after the settelment with asset is paid in cash.
9. If any unrecorded liability is paid by giving recorded asset and if any amount yet remains to be paid towards that liability then it is paid by cash.
10. As per balance of partners capital account they can take cash or they have to bring cash and accordingly the effects are given in Cash/ Bank Account and it is closed after the adjustments.
