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BUSINESS CASE

Presented to the
Accountancy Department
De La Salle University

In partial fulfillment
Of the course requirements
In ACTPACO (K32)

Duhaylungsod, Paul Angelo, P.
March 5, 2013
DECISION MAKING ACROSS THE ORGANIZATION

Richard Powers and Jane Keckley, two professionals in the finance area, have worked for Eberhart Leasing for a number of years. Eberhart Leasing is a company that leases high-tech medical equipment to hospitals. Richard and Jane have decided that, with their financial expertise, they might start their own company to provide consulting services to individuals interested in leasing equipment. One form of organization they are considering is a partnership.

If they start a partnership, each individual plans to contribute P2 million in cash. In addition, Richard has a used IBM computer that originally cost P148,000, which he intends to invest in the partnership. The computer has a present market value of P60,000.

Although both Richard and Jane are financial wizards, they do not know a great deal about how a partnership operates. As a result, they have come to you for advice.

1. What are the major disadvantages of starting a partnership? Partnership can easily dissolve automatically when one of its partners no longer wishes to participate in the business, or is unable to. This may happen in the event of death, bankruptcy, retirement or resignation. A divorce could also force a partner to attempt to cash out his interest, since decisions are shared, disagreements can occur. A partnership is for the long term, and expectations and situations can change, which can lead to dramatic and traumatic split ups. Business partners are jointly and individually liable for the actions of the other partners and you have to consult your partner and negotiate more as you cannot make decisions by yourself therefore need to be more flexible and a major disadvantage of a partnership is unlimited liability. General partners...
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