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Ltd company with ordinary partnership

How to bring in ordinary partnership accounts to Ltd company

Our company is forming an ordinary partnership in which there is one other partner, the share of profits is set up 99.9% Ltd company 0.01% other partner. 

I was of the understanding that at year end I would consolidate the ordinary partnership balance sheet and p&l into the LTD companies accounts as the partnership represents a subsidiary. In line with FRS 102 standards. 

However my auditors have suggested that the LtD company could bring in 99.9% of the partnership accounting profit into the P&L and show a corresponding investment on the balance sheet. I believe using standard in FRS relating to investments in subsidiaries. 

What is the correct accounting approach? If it is what the auditors have suggested why would I not consolidate on a line by line basis. 

Many thanks 

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By Ruddles
17th Mar 2018 13:26

I’m going to do a “John” and ask “why the structure?”

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17th Mar 2018 14:00

Your auditors are right and you are wrong.

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to johngroganjga
17th Mar 2018 14:34

Can you elaborate as to why so I can understand better?

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to Notoriousarian
17th Mar 2018 15:40

Notoriousarian wrote:

Can you elaborate as to why so I can understand better?

Why? As in why are you wrong and they are right...

Because the auditors are professional accountants who are paid to advise and you are not.

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to Manchester_man
17th Mar 2018 15:51

I am a professional accountant, but thank you for your helpful advice.

I am simply trying to understand why their treatment is correct.

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By DJKL
17th Mar 2018 21:30

Have you considered 9.3 as a possible reason for the auditor's viewpoint, you have not indicated whether or not the parent requires to prepare consolidated accounts?

If pertinent then consider 9.26.

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17th Mar 2018 21:30

The company is a partner in a partnership.

You should prepare partnership accounts as normal, and then the company receives 99.99% of the profit of the partnership as turnover/income with the other side being 'Investment in Partnership'.

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