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What do you understand by dissolution of firm?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 preetham asked over 2 years ago

Hi May I know, What do you understand by dissolution of firm?

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Rwimali boro commented 9 months ago

what is dissolution of partnership firm..??

Rwimali boro commented 9 months ago

explain the different modes of dissolution of partnership firm.

Rwimali boro commented 9 months ago

what do u mean by cost function..??

7 Answers
Open uri20170510 32134 1c996lj?1494421732 Anil answered about 1 year ago

  Section 39 of the Indian Partnership Act, provides that “the dissolution of the partnership between all the partners of a firm is called the dissolution of a firm.” It implies the complete break down of the relation of partnership between all the partners.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Surbhi answered about 2 years ago

Partnership Accounts – Dissolution of Partnership Firms. Meaning of Dissolution. Dissolution of a partnership firm is the process by which the existence of a partnership firm comes to an end. This involves the sale or disposal of assets, settlement of liabilities and closing of books of accounts.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered over 2 years ago

1.Change in profit sharing ratio among partners; 2.Admission of a new partner; 3.Retirement of a partner, where at least two persons remain as partners; 4.Death of a partner (Section 42); 5.Adjudication of a partner as an insolvent; 6.Completion of a venture if partnership is formed for that; 7.Expiry of the period of partnership if partnership is for a pre-determined

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered over 2 years ago

Dissolution of a partnership firm is the process by which the existence of a partnership firm comes to an end. This involves the sale or disposal of assets, settlement of liabilities and closing of books of accounts. Once the outside liabilities of the firm are settled, the partners take away their capital investment. If there is any surplus or deficit in this process it will be shared by the partners in their profit sharing ratio. Dissolution of a partnership firm can take place on account of any of the following reasons: a. Dissolution by Agreement: When the partners themselves reach an agreement to discontinue their business for whatever reason, it is known as dissolution by agreement.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered over 2 years ago

**Dissolution of firm** --Dissolution of a partnership firm is the process by which the existence of a partnership firm comes to an end. This involves the sale or disposal of assets, settlement of liabilities and closing of books of accounts. Once the outside liabilities of the firm are settled, the partners take away their capital investment. If there is any surplus or deficit in this process it will be shared by the partners in their profit sharing ratio. --Dissolution of a partnership firm can take place on account of any of the following reasons: a. Dissolution by Agreement: When the partners themselves reach an agreement to discontinue their business for whatever reason, it is known as dissolution by agreement. b. Compulsory Dissolution: Compulsory dissolution takes place when the business of the firm is declared illegal, or the partners become insolvent or the citizen of an enemy country happens to be partner of the firm. c. Dissolution by notice: A partner can demand dissolution of a partnership at will, by serving a notice to the firm. d. Dissolution by Court: Court may initiate dissolution of a firm under the following circumstances: i) When one of the partners has become of unsound mind ii) When a partner is guilty of misconduct which may affect the business iii) When a partner commits wilful breach of contract iv) Any other reason which the court may find adequate e. Dissolution by the expiry of a pre determined period or completion of event: This dissolution takes place in case of particular partnerships which are formed for a specific period or the completion of a specific project. Such partnerships will be dissolved at the completion of the specific period of or the project as the case may be.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Chirag answered over 2 years ago

**Dissolution of a Partnership** The relation of partnership among different partners is changed without changing the partnership firm. Thus, in case of dissolution of partnership, the economic basis of relationship of partners is reconstituted without affecting the entity of the firm which continues to remain in business as ever before. A partnership is dissolved by change of mutual contract in the following cases : 1.Change in profit sharing ratio among partners; 2.Admission of a new partner; 3.Retirement of a partner, where at least two persons remain as partners; 4.Death of a partner (Section 42); 5.Adjudication of a partner as an insolvent; 6.Completion of a venture if partnership is formed for that; 7.Expiry of the period of partnership if partnership is for a pre-determined period; 8.Merger of one partnership firm into another. **Dissolution of a Firm** Dissolution of a firm takes place in the following cases : (1) Dissolution by agreement : A firm is dissolved in case : (a) All the partners give consent to it, or (b) As per the terms of partnership agreement. (2) Compulsory dissolution : A firm is dissolved compulsorily in the following cases : (a) Where all the partners or all except one partner, become insolvent or insane rendering them incompetent to sign a contract; (b) Where the business becomes illegal; (c) Where all the partners except one decide to retire from the firm; (d) Where all the partners or all except one partner dies; (e) Where the partnership deed includes any provision regarding the happening of the following : (i) Expiry of the period for which the partnership was formed; (ii) Completion of the specific venture or project for which the firm was formed. (3) Dissolution by notice : In case of partnership at will, the firm may be dissolved if any of the partners gives a notice in writing to the other partners signifying his intention of seeking dissolution of the firm. (4) Dissolution by court : A court, may order a partnership firm to be dissolved (under Section 44), in case of a suit by a partner in the following situations : (a) A partner becomes insane; (b) A partner becomes permanently incapable of performing his duties as a partner; (c) A partner deliberately and consistently commits breach of agreements relating to the management of the firm; (d) A partner’s conduct is likely to adversely affect the business of the firm; (e) The partner transfers whole of his interest in the firm to a third party; (f) The business of the firm cannot be carried on, except at a loss; (g) The court, on any ground, regards dissolution to be just and equitable.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 HIMANSHU answered over 2 years ago

Dissolution of Firm:- It must be noted at there are difference between dissolution of firm and dissolution of partnership. Partnership Act describes, " The dissolution of partnership between all the partners of a firm is called the dissolution of the firm." It means that dissolution of the firm includes the dissolution of partnership. But when partnership is dissolved, the firm may or may not be dissolved because the business may be conducted by the surviving partner on the retirement, death or insolvency of partners. So it is dissolution of the partnership but not dissolution of firm. It becomes clear that a that a partnership may be dissolved without dissolving the firm. When firm is dissolved all the activities must come to an end and the assets of the firm disposed of and distributed among the creditors and the balances, if any, distributed among the members of the firm. Ways of Dissolution The following are the five manners is which firm may be dissolved. 1. Compulsory Dissolution. 2. Dissolution by Notice. 3. Dissolution by Agreement. 4. Contingent Dissolution. 5. Dissolution by Court. 1. Compulsory Dissolution: A. By the insolvency of partner:- A firm shall be dissolved when all the partners or all but one becomes insolvent. B. By Business becoming illegal:- A firm shall be dissolved when the business of the firm is declared illegal or becomes unlawful due to happening of any event. 2. Dissolution by Notice: In Case of partnership at will:- The firm may be dissolved by any partner serving notice in writing of 14 days to all the existing partners of his intention to dissolve the firm. 3. dissolution by Agreement: With the consent of all partners:- A firm may be dissolved by the mutual consent of all partners at any time or in accordance with a contract between the partners. 4. Contingent Dissolution: The partnership firm may be dissolved due the following reasons:- A.Completion of Venture:- By the completion of particular undertaking or venture for which the partnership was formed. B. Expiry of Period:- If partnership formed for a fixed period, the firm may be dissolved by the expiry of that time in the absence of new contract. C. Insolvency of the partner:- By the adjudication of a partner as an insolvent. D. Death of partner:- The firm may be dissolved by the death of partner whether the partnership is as will or for a fixed period. E. Insolvency of partnership:- If partnership is itself declared at any time as insolvent. F. Retirement of partner:- The partnership may come to an end on the retirement of any partner if remaining partners do not join in the new contract. 5. Dissolution by Court: The following are the grounds in which a firm may be dissolved by the order of court:- A. A transfer of interest:- If any partner transfer his share or interest to other person with out the consent of existing partners. B. Breach of contract:- If any partner commits breach of the partnership contract and remaining partners find it impossible to continue the business. C. Unsound mind:- If any partner becomes of unsound mind. D. In-capacity of partner:- The firm may be dissolved when a partner shows his incapacity to performs his duties due to any physical or mental disease. E. Misconduct of partner:- If a partner is found guilty of misconduct in the carrying on the business. F. Assurance of loss:- The Court may issue the order of dissolution if the business of the firm cannot be carried on except at a loss. G. Other grounds:- The court may dissolve the firm on any other grounds which is just and equitable.

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