Information regarding partners: Partner.. Jacobsen Petersen Olsen Partner's capital balance. Partner's profit and loss percentage... Information regarding net asset values: Account title.. Book value. $150,000 $100,000 $50,000 30% 50% 20% Note Payable Net Receivables Net Patents Net Equipment $130,000 145,000 $ 90,000 $50,000 $300,000 Market value 84,000 30,000 350,000
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Petersen, one of your clients, has indicated that Jacobsen is interested in buying Petersen’s interest in the
Petersen has asked you a number of questions regarding selling his interest in the partnership. It is important to note that the partners vote on partnership matters in the same proportion as their
Prepare a response to each of the following questions:
1. Given the above information, what is the suggested value of Petersen’s interest in the partnership?
2. Petersen believes that there is significant additional value traceable to the partnership that is not reflected in the above information. In particular, Petersen believes that the partnership has significant
3. If Petersen were to sell half of his interest in the partnership to Jacobsen and half to Olsen, why might the value of the two halves not be the same?
4. If Petersen were to sell one-half of his interest to the partnership for $60,000, what would his new capital balance be after the sale? Assume that all previously recognized net assets are recorded at their market values but that only the goodwill traceable to Petersen’s partial sale of an interest is recognized.
5. What might be some advantages to Petersen and Jacobsen of the partnership acquiring Petersen’s interest rather than selling to an individual?
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