Changes in the ownership structure of a partnership are one of the most important areas related to the operation of a partnership. Unlike a corporation, changes in the ownership structure of a partnership produce events that require special accounting treatment. This accounting treatment is heavily influenced by the legal concept of dissolution. The reason for this is that any time there is a change in the ownership structure, the original partnership is dissolved, and a new partnership is created.
Because the accounting for a partnership is influenced by the proprietary theory, however, measuring changes in the equity of individual partners is a major aspect of partnership accounting.
The changes in the equity of individual partners can come about by the admission of a new partner, the withdrawal of an existing partner, or the ultimate liquidation of the partnership. Chapter 14 explores these changes. To find out more, go here (coming soon).