ACCTBA2 INDIVIDUAL BUSINESS CASE

1st Term, Academic Year 2018-2019

Source: Weygant, Chalmers, Mitrione, Fyfe, Kieso, Kimmel. ” Financial Accounting, 2 nd Edition”. John Wiley & Sons
Australia, Ltd. with modifications

Finance Consulting to Partnering In a Business Venture

Anthony de Padua and John Capistrano, two professionals in the finance area, have worked for Teresa Avila Leasing for
a number of years. Teresa Avila Leasing is a company that leases high-tech medical equipment to hospitals. Anthony
and John have decided that, with their financial expertise, they might start their own business to provide consulting
services to individuals interested in leasing their equipment. One form of entity they are considering is a partnership.

If they start a partnership, each individual plans to contribute P500,000 in cash. In addition, Anthony has a used MAC
computer that originally cost P120,000, which he intends to invest in the partnership. The computer has a fair value of
P70,000.

Although both Anthony and John are financial wizards, they do not know a great deal about how a partnership operates.
As a result, they have come to you for advice.

Requirement:
Answer the following:
a. What are the major disadvantages of starting a partnership?
b. What type of documents is needed for a partnership, and what should this document contain?
c. Both Anthony and John plan to work full-tine in a new partnership. They believe that profit and loss should be
shared equally. However, they are wondering how they can provide compensation to Anthony for his additional
investment of the computer. What would you tell them?
d. Anthony is not sure how the computer equipment should be reported on his tax return. What would you tell him?

FORMAT:
(1) Paper size: 8.5” x 11”
(2) Margin: 1” on all sides
(3) Font and font size: Arial 12
(4) Paragraph alignment: Justified
(5) Paragraph spacing: Double-spaced
(6) Maximum of 2 pages excluding cover page
(7) No need for folder
(8) Deadline for submission: TH class: November 6,2018
(9) The cover page should be as follows:

Finance Consulting to
Partnering in a Business Venture

Short business case analyses

presented to the
Accountancy Department

In partial fulfillment
of the course requirements
in ACCTBA2

Surname, First Name, M.I.

Section
Class Number __
Date