Partnership Accounting - Capital Interest

Capital Interest

A capital interest is an interest that would give the holder a share of the proceeds in either of the following situations:

  • The owner withdraws from the partnership.
  • The partnership liquidates.

The mere right to share in earnings and profits is not a capital interest in the partnership. This determination generally is made at the time of receipt of the partnership interest.

Read more about this topic:  Partnership Accounting

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