Juancho and Miguel entered into a partnership agreement wherein Juancho is to have a 60% interest in capital and profits while Miguel is to have a 40% interest in capital and profits. Juancho contributed the following non cash assets and enough cash to meet the 60% interest in capital. Book Value Fair Value Land 500,000 875,000 Building 1,250,000 625,000 Equipment 375,000 250,000 There is a 250,000 mortgage on the building that the partnership agrees to assume. Miguel contributed 1,500,000 cash for his 40% interest in the firm. Assume the bonus method is used to account for the formation. How much is the total assets of the partnership after the formation?
Juancho and Miguel entered into a partnership agreement wherein Juancho is to have a 60% interest in capital and profits while Miguel is to have a 40% interest in capital and profits. Juancho contributed the following non cash assets and enough cash to meet the 60% interest in capital.
Book Value Fair Value
Land 500,000 875,000
Building 1,250,000 625,000
Equipment 375,000 250,000
There is a 250,000 mortgage on the building that the partnership agrees to assume. Miguel contributed 1,500,000 cash for his 40% interest in the firm. Assume the bonus method is used to account for the formation.
How much is the total assets of the partnership after the formation?
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