A Partnership with Unlimited Possibilities: A Case of Allocation of Partnership Income and Common Costs


Most cases are written for upper- and graduate-level accounting classes, however, this case was written to be used in introductory accounting classes. It involves a recent college graduate who, while eating lunch, is asked by a potential client about the benefits of entering into a partnership. Three issues must be addressed: are the risks of entering the partnership worth the increase in income; is the partnership allocation formula fair to the potential partner; and should the common costs be allocated differently? Students need to use the accounting information provided and advise the client about making important business decisions. The student has to write a memo explaining the benefits and risks of joining the partnership. The facts of the case add a real-world element to this discussion.

This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2023 Sage Publications, Inc. All Rights Reserved

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