Questions: Global Cash Flow
Q: Question 4 states that you can find information about the partnership's interest bearing debt on a Schedule K-1? Doesn’t it come from the balance sheet?
A: The best source of information is the company's accrual balance sheet, which reports interest-bearing debt and usually provides a footnote that includes more information about specific terms and conditions of each credit facility.
A Schedule K-1 from a partnership captures a) nonrecourse, b) qualified nonrecourse, and c) recourse debt obligations, but the information on Schedule K-1 does not specify that any or all of such obligations are interest-bearing even though the implication is that they are interest-bearing.
The Schedule K-1 (Form 1065) for a partnership records the partner’s pro-rata share of debt for the partnership, but all general partners are legally responsible for all partnership debt. Therefore, one can get an estimate of all debt by dividing the pro-rata share by the percentage of ownership.