I know that this is going to be a long question but this has me totally stumped ... I honestly do not even know where to start!

Amy Hynes and and Tommy Lyon are forming a partnership to which Hynes will devote one-half time and Lyon will devote full time.

They have discussed the following alternative plans for sharing income and loss:

1- the ratio of their initial capital investments, which they agrees will be 42,000 for Hynes and 63,000 for Lyon

2- in proportion to the time devoted to the business

I understand the rest of the question but where do I even start with these two aspects.
The ratio part of the question always stumps me ... I want to say that with Lyon investing the majority he would receive the biggest amount (80 %) and Hynes less (20%)? But i am not even sure if I am on the right track there.

With the time devotion entry I am completely lost I have never faced this type of aspect so where do you even start?

I was asked to place this into tables one for each of the first three years
the following is the projected performance for those three years (if this helps make any sense)
Year 1 - 36,000 (loss)
Year 2- 90,000 (net income)
Year 3 - 150,000 (net income)
I know this is a lot to ask but if someone could just start me in the right direction and I hope that I can grasp what is being asked...

Thanks

CaptainForest

If their partnership agreement states that profits and losses will be divided to the amount of time devoted to the business, that is how you devote them.

So since Lyon spend all his time while Hynes only half, Lyon should receive double the profits/losses.

A ratio of 2:1 for Lyon:Hynes.

So if the company earns $3, Lyon receives $2, and Hynes $1

venugopalarao

According to Indian partnership act the profits and the losses are divided equally among the partners irrespective of their contributions to their capital.

pree007

The question u asked is relevent as any student can get confused easily, it is a rare situation that partners divide the fruit of business according to time devotion. The main point of consideration in such a situation is to look at the partnership aggrement and act accordingly.As ur question specifically says divide profit according to time it is appropriate to do so.and treat these two questions seprately and answer them as thay r exclusive of each other.