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
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
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
Petersen, one of your clients, has indicated that Jacobsen is interested in buying Petersen’s interest in the partnership. Relevant information: (attached)
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 profit and loss percentages.
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 goodwill and feels that his interest in the partnership is worth $130,000. What amount of total entity goodwill is suggested by this value? 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?
Transcribed Image Text: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
Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
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.
