John, Jeff and Jane, decided to engage in a real estate venture as a partnership. John invested, P100,000.00 cash and Jeff provided an office equipment that is carried in the books at P82,000.00. The partner agree that the equipment has a fair value of P110,000.00. There is a P30,000.00 note payable remaining on the equipment to be assumed by the partnership. Although Jane has no physical assets to invest in the partnership, both John and Jeff believe that her experience as a real estate appraiser is a valuable skill needed by the partnership and is a basis for granting her capital interest in the partnership. REQUIRED: A. Record the partnership formation under the bonus method B. Record the partnership formation under the goodwill (revaluation of asset) method and assume a total goodwill (or total adjustment) of P90,000.00 C. Discuss the appropriateness of using either the bonus or goodwill methods to record the formation of the partnership

John, Jeff and Jane, decided to engage in a real estate venture as a partnership. John invested, P100,000.00 cash and Jeff provided an office equipment that is carried in the books at P82,000.00. The partner agree that the equipment has a fair value of P110,000.00. There is a P30,000.00 note payable remaining on the equipment to be assumed by the partnership. Although Jane has no physical assets to invest in the partnership, both John and Jeff believe that her experience as a real estate appraiser is a valuable skill needed by the partnership and is a basis for granting her capital interest in the partnership. REQUIRED: A. Record the partnership formation under the bonus method B. Record the partnership formation under the goodwill (revaluation of asset) method and assume a total goodwill (or total adjustment) of P90,000.00 C. Discuss the appropriateness of using either the bonus or goodwill methods to record the formation of 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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