Reporting in Action — BTN 12-1
1. The founders of Apple are Steve Wozniak, Steve Jobs and Ron Wayne.
Each Apple I personal computer kit was single-handedly designed and
2. At least two differences would be immediately apparent between
(i) First, in a general partnership, income flows through to the partners
(ii) Second, a corporate income statement shows earnings per share
3. Specifically, the balance sheet for a partnership would not have the
following accounts as reported in the Apple balance sheet reproduced
in Appendix A:
Deferred tax assets
We would expect a separate Capital account to be reported for each
partner in the equity section of the balance sheet.
Comparative Analysis — BTN 12-2
1. Apple was organized/founded in 1976, and Google was
3. Apple and Google stock are both listed on the NASDAQ Exchange.
4. Apple’s total equity (book value) is $123,549 million at September 28,
Ethics Challenge — BTN 12-3
1. Income allocation per original agreement
Mobey Oak Chesterfield Total
Salary allowance………….. $ 3,000 $ 3,000 $ 3,000 $ 9,000
2. Income allocation per Chesterfield’s proposal
Mobey Oak Chesterfield Total
(.10 x 50,000)
(.30 x 50,000)
(.60 x 50,000)
3. The ethical concern here is that Chesterfield has proposed a change to
the partnership agreement that appears to be only self-serving. It is true
that Chesterfield is the group’s largest producer and, therefore, is
A potentially fair compromise would be to study the referral patterns of
Mobey and Oak. Through analysis, a dollar value can be assigned to the
Communicating in Practice — BTN 12-4
— STUDY NOTES —
ORGANIZATIONS WITH PARTNERSHIP CHARACTERISTICS
I. Limited Partnerships
II. Limited Liability Partnerships
III. S Corporations
IV. Limited Liability Companies
I. Limited Partnerships
These organizations are identified in its name with the words “Limited
A limited partnership has two classes of partners, general and limited. At
A limited partnership is managed by the general partner(s). Limited
A limited partnership agreement often specifies unique procedures for
II. Limited Liability Partnerships
This is identified in its name with the words “Limited Liability Partnership”
or by “LLP.”
This type of partnership is designed to protect innocent partners from
malpractice or negligence claims resulting from the acts of another
Communicating in Practice (Concluded)
Continued
III. S Corporations
Certain corporations with 100 or fewer stockholders can elect to be
treated like a partnership for income tax purposes. These corporations are
“S” corporations provide stockholders with the same limited liability
The remaining income or loss of the corporation is allocated to
IV. Limited Liability Companies
A new form of business organization is the limited liability company. The
This form of business has certain features like a corporation and others
like a limited partnership. The owners, who are called members, are
A limited liability company usually has a limited life.
Taking It to the Net — BTN 12-5
1. The account titles given in the equity section of Advanced BioEnergy,
LLC are:
Teamwork in Action — BTN 12-6
1.
Income (Loss)
Sharing Plan Calculations Baker Warner Rice Total
(a) $450,000/3………………………………………………….$150,000 $150,000 $150,000 $ 450 ,000
(b) $450,000 x ($200,000/$1,000,000)…………………….
$ 90,000
(c) Net income………………………………………………… $ 450,000
Salary allowances………………………………………$ 50,000 $ 60,000 $ 70,000 (180 ,000)
(d) Net Income………………………………………. $ 450,000
Interest allowances:
10% x $200,000………………………………$ 20,000
2. Team members share solutions.
3. Answers will vary by team. One additional income sharing basis would
be to share income based on time worked in the partnership.
Entrepreneurial Decision — BTN 12-7
1. Daniel, Craig, and their future partners would be wise to construct an
agreement that includes the following:
a) names (reputations) and contributions
b) rights and duties
2. The partnership form of business organization will have several
advantages for Daniel, Craig, and their partners. Three of these
3. Several disadvantages exist with the partnership form of organization.
Three of these include: (a) The greatest disadvantage is that each
Global Decision — BTN 12-8
1. Byung-Chull Lee (also referred to as Lee Byung-Chull)
organized/started the company in 1938 in Taegu, Korea.
2. In the beginning, the company focused primarily on trade export,
selling dried Korean fish, vegetables, and fruit to Manchuria and
3. Samsung groups its affiliated companies into five areas:
Electronics
Machinery & Heavy Industries