Dunn and Grey are partners with capital account balances of $60,000 and $90,000, respectively. They agree to admit Zorn as a partner with a one-third interest in capital and profits, for an investment of $100,000, after revaluing the assets of Dunn and Grey. Goodwill to the original partners should be a.$O b. $33,333 b.$50,000 d. S66,667

Dunn and Grey are partners with capital account balances of $60,000 and $90,000, respectively. They agree to admit Zorn as a partner with a one-third interest in capital and profits, for an investment of $100,000, after revaluing the assets of Dunn and Grey. Goodwill to the original partners should be a.$O b. $33,333 b.$50,000 d. S66,667

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter14: Partnerships And Limited Liability Entities

Section: Chapter Questions

Problem 2BD

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8. Dunn and Grey are partners with capital account balances of $60,000 and $90,000, respectively. They agree to admit Zorn as a partner with a one-third interest in capital and profits, for an investment of $100,000, after revaluing the assets of Dunn and Grey. Goodwill to the original partners should be a. $0 b. $33,333 c. $50,000 d. $66,667
5. Assume that a partnership had assets with a book value of P240,000 and a market value of P195,000, outside liabilities of P70,000, loans payable to partner Able of P20,000, and capital balances for partners Able, Baker, and Chapman of P70,000, P30,000, and P50,000. How much would Able receive upon liquidation of the partnership assuming profits and losses are allocated equally? a. P70,000 b. P90,000 C. P75,000 d. P55,000
2. Hammer and Nail formed a partnership. Hammer contributed equipment with original cost of P370,000 and fair value of P300,000 while Nail contributed cash of P180,000. Hammer and Nail agreed to have a 60:40 interest in the partnership and that their initial capital credits should reflect this fact. A partner's capital account should be increased accordingly by way of additional cash investment. Which of the partners should make an additional investment and by how much? a. Hammer, P20,000 b. Nail, P20,000 c. Hammer, P70,000 d. Nail, P70,000
4. Roberts and Smith drafted a partnership agreement that lists the following assets contributed at the partnership's formation: Contributed by Roberts Smith $20,000 $30,000 15,000 40,000 Cash Inventory Building Furniture & Equipment 15,000 The building is subject to a mortgage of $10,000, which the partnership has assumed. The partnership agreement also specifies that profits and losses are to be distributed evenly. What amounts should be recorded as capital for Roberts and Smith at the formation of the partnership? Roberts Smith $35,000 $85,000 $35,000 $75,000 $55,000 $55,000 $60,000 $60,000 а. b. с. d.
Dunn and Grey are partners with capital account balances of ₱60,000 and ₱90,000, respectively. They agree to admit Zorn as a partner with a one-third interest in capital and profits for an investment of ₱100,000 after revaluing the assets of Dunn and Grey. Goodwill to the original partners should be (use PFRSs in answering this problem) A. 66,667 B. 33,333 C. 0 D. 50,000
Mighty Darrel and Super Zigg formed a partnership and agreed to have an equal interest in thepartnership’s assets. They agreed to make the following contributions : Darrel contributed 100,000and Zigg contributed 84,000 in identifiable assets. Under the bonus approach, what is the amount ofbonus from Darrel to Zigg capital? A. 46,000B. 16,000C. 8,000D. 0
4. A, B, C, and D are partners, sharing earning in the ratio of 3/21, 4/21, 6/21, and 8/21, respectively. The balances of their capital accounts on December 31, 20x1 are as follows: A B C D P1,000 25,000 25,000 9,000 P60,000 The partners decide to liquidate, and they accordingly convert the on-cash assets into P23,200 cash. After paying the liabilities amounting to $3,000, they have P22,000 to divide. Assume that a debit balance of any partner's capital is uncollectible. The share of B in the cash distribution to the partners was: (round-off answer)
5. Under partnership formation
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Exercise 1 (LO 3, 4) Entry of a new partner under the goodwill method. Pearson and Murphy have partner capital balances, at book value, of $45,000 and $65,000 as of Decem- ber 31. Pearson is allocated 60% of profits or losses, and Murphy is allocated the balance. The partners believe that tangible net assets have a market value in excess of book value in the amount of $30,000 net. The $30,000 is allocated as follows: Book Value Market Value Accounts receivable Inventory .... Warranty obligations $120,000 200,000 20,000 $102,000 258,000 30,000 They are considering admitting Warner to the partnership in exchange for total considera- tion of $84,000 cash. In exchange for the consideration, Warner will receive a 30% interest in capital and a 35% interest in profits. 1. Prepare the entries associated with the admission of Warner to the partnership under the goodwill method. 2. If the goodwill suggested by the admission of Warner proved to be worthless, determine by how much Warner would be…
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