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In an advance plan for installment distributions of cash to partners of a liquidating partnership, each partner's loss absorption potential is computed bydividing each partner's capital account balance by the percentage of that partner's capital account balance to total partners' capital.
What is partnership?
Partnership involves 2 or more person putting resources together to manage a business.
The share of each individual determines their worth in the partnership.
The amount or the balance each individual can be divided from the total capital to compute for the amount to be paid for liquidating.
Therefore,
In an advance plan for installment distributions of cash to partners of a liquidating partnership, each partner's loss absorption potential is computed bydividing each partner's capital account balance by the percentage of that partner's capital account balance to total partners' capital.
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