E 16-12 Partner retirement entries—Fair value adjustment A balance sheet at December 31, 2016, for the Bec, Dee, and Lyn partnership is summarized as follows: Assets $800,000 Liabilities $200,000 Loan to Dee 100,000 Bec capital (50%) 300,000 $900,000 Dee capital (40%) 300,000 Lyn capital (10%) 100,000 $900,000 Dee is retiring from the partnership. The partners agree that partnership assets, excluding Dee’s loan, should be adjusted to their fair value of $1,000,000 and that Dee should receive $310,000 for her capital balance net of the $100,000 loan. The bonus approach is used; therefore, no goodwill is recorded. Required Determine the capital balances of Bec and Lyn immediately after Dee’s retirement.
E 16-12 Partner retirement entries—Fair value adjustment A balance sheet at December 31, 2016, for the Bec, Dee, and Lyn partnership is summarized as follows: Assets $800,000 Liabilities $200,000 Loan to Dee 100,000 Bec capital (50%) 300,000 $900,000 Dee capital (40%) 300,000 Lyn capital (10%) 100,000 $900,000 Dee is retiring from the partnership. The partners agree that partnership assets, excluding Dee’s loan, should be adjusted to their fair value of $1,000,000 and that Dee should receive $310,000 for her capital balance net of the $100,000 loan. The bonus approach is used; therefore, no goodwill is recorded. Required Determine the capital balances of Bec and Lyn immediately after Dee’s retirement.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
E 16-12 Partner retirement entries—Fair value adjustment
A
Assets |
$800,000 |
Liabilities |
$200,000 |
Loan to Dee |
100,000 |
Bec capital (50%) |
300,000 |
|
$900,000 |
Dee capital (40%) |
300,000 |
|
|
Lyn capital (10%) |
100,000 |
|
|
|
$900,000 |
Dee is retiring from the partnership. The partners agree that partnership assets, excluding Dee’s loan, should be adjusted to their fair value of $1,000,000 and that Dee should receive $310,000 for her capital balance net of the $100,000 loan. The bonus approach is used; therefore, no
Required
Determine the capital balances of Bec and Lyn immediately after Dee’s retirement.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education