Assume that AB Partnership has the following balance sheet. AB agrees to permit new partner C to join the partnership with a one third interest for $300,000 cash. Assuming the partners agree to use the goodwill method for entry of partner C. Cash $120,000 Total Liabilities $340,000 Receivables 160,000 260,000 $540,000 Inventories Capital A 100,000 100,000 $540,000 Total assets Capital B Total Liab & Eq www A. Compute the value of the partnership including intangibles immediately before C's contribution, if C is willing to pay $300,000 for a one third interest in the pre-contribution net assets. B. Compute the value of the goodwill. C. What is the value of each, A and B's interest reported on the books presuming goodwill method is used? D. What is value of C's interest to be reported on books presuming goodwill method is used? E. Prepare the journal entry or entries to record goodwill and Cs admission to the partnership

Assume that AB Partnership has the following balance sheet. AB agrees to permit new partner C to join the partnership with a one third interest for $300,000 cash. Assuming the partners agree to use the goodwill method for entry of partner C. Cash $120,000 Total Liabilities $340,000 Receivables 160,000 260,000 $540,000 Inventories Capital A 100,000 100,000 $540,000 Total assets Capital B Total Liab & Eq www A. Compute the value of the partnership including intangibles immediately before C's contribution, if C is willing to pay $300,000 for a one third interest in the pre-contribution net assets. B. Compute the value of the goodwill. C. What is the value of each, A and B's interest reported on the books presuming goodwill method is used? D. What is value of C's interest to be reported on books presuming goodwill method is used? E. Prepare the journal entry or entries to record goodwill and Cs admission to the partnership

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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