How to journalize the buy out of a partner?

There are factors that will affect the answer to that, so there isn't any one simple answer. A lot of it depends on whatever agreement the involved partners may have made. Theoretically, everything should be caught up to that date, including all adjustments. That way you have the exact value of the partner's share. Once that's done, in a simple senario, the new partner buys the older partner's share intact. That is, that partner has exactly 68% and the new partner just takes over that 68%. Then all you have to do is change the name on the account. Any gain or loss in that case would be between the partners and nothing to do with the company.

Quote:

---

Originally Posted by morgaine300

There are factors that will affect the answer to that, so there isn't any one simple answer. A lot of it depends on whatever agreement the involved partners may have made.

---

An excellent point. If the deal is structured "outside" of the partnership--i.e. a purchase by one partner of another's interest--then, just as Morgaine300 has said, there's not much for the partnership to do but update the records accordingly.

On the other hand, PJHBookkeeper, are you looking at a redemption of a partner by the partnership itself? If so, the booking of such a deal will have to take into account the consideration given by the p-ship in exchange for the equity--cash, notes, property?