Liam, Michael and Noah own interests in the LMN Partnership. Their current capital account balances are as follows:Liam$450,000Michael 350,000Noah200.000Partnership income is shared in a 1:5:4 ratio. Olivia buys a 20% interest in the partnership by acquiring 20% of each existing partner's interest, paying the three partners a total of $300,000.Partnership identifiable net assets are currently reported at amounts approximating fair value.Using the transfer of capital interests approach, Liam's capital balance immediately following admission of Olivia is: Liam, Michael and Noah own interests in 1Dam$450,000Michael 350,000Noah 200,000ship. Their communicPartnership income is shared in a 1:5:4 ratio. Olivia buys a 20% interest in the partnership by acquiring 20% of each existing partner's interest, paying the three partners a total of $300,000Partnership identifiable net assets are currently reported at amounts approximating fair value.Using the transfer of capital interests approach, Liam's capital balance immediately following admission of Olivia isSelect onea $450,000b. $360,000c$405,000d. $440,000

Partnership refers to an agreement between two or more persons who are dealing with doing business…

Answered: Liam, Michael and Noah own interests in…

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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Liam, Michael and Noah own interests in the LMN Partnership. Their current capital account balances are as follows:

Liam

$450,000

Michael 350,000

Noah

200.000

Partnership income is shared in a 1:5:4 ratio. Olivia buys a 20% interest in the partnership by acquiring 20% of each existing partner's interest, paying the three partners a total of $300,000.

Partnership identifiable net assets are currently reported at amounts approximating fair value.

Using the transfer of capital interests approach, Liam's capital balance immediately following admission of Olivia is:

Liam, Michael and Noah own interests in 1
Dam
$450,000
Michael 350,000
Noah 200,000
ship. Their communic
Partnership income is shared in a 1:5:4 ratio. Olivia buys a 20% interest in the partnership by acquiring 20% of each existing partner's interest, paying the three partners a total of $300,000
Partnership identifiable net assets are currently reported at amounts approximating fair value.
Using the transfer of capital interests approach, Liam's capital balance immediately following admission of Olivia is
Select one
a $450,000
b. $360,000
c$405,000
d. $440,000

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.

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