Petersen, one of your cli-ents, has indicated that Jacobsen is interested in buying Petersen’s interest in the partnership.Relevant information:Information regarding partners: . . . . . . .Partner . . . . . . . . . . . . . . . . . . . . . . . . .JacobsenPetersenOlsenPartner’s capital balance . . . . . . . . . . .$150,000$100,000$50,000Partner’s profit and loss percentage. . .30%50%20%Information regarding net asset values:Account title . . . . . . . . . . . . . . . . . . . . . Note Payable Net Receivables Net Patents Net EquipmentBook value . . . . . . . . . . . . . . . . . . . . . .$130,000$ 90,000$50,000$300,000Market value . . . . . . . . . . . . . . . . . . . .145,00084,00030,000350,000Petersen has asked you a number of questions regarding selling his interest in the partner-ship. It is important to note that the partners vote on partnership matters in the same propor-tion 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 thepartnership?2. Petersen believes that there is significant additional value traceable to the partnership that isnot reflected in the above information. In particular, Petersen believes that the partnershiphas 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 wouldhis new capital balance be after the sale? Assume that all previously recognized net assets arerecorded at their market values but that only the goodwill traceable to Petersen’s partial saleof an interest is recognized.5. What might be some advantages to Petersen and Jacobsen of the partnership acquiring Peter-sen’s interest rather than selling to an individual?
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 cli-ents, has indicated that Jacobsen is interested in buying Petersen’s interest in the partnership.Relevant information:Information regarding partners: . . . . . . .Partner . . . . . . . . . . . . . . . . . . . . . . . . .JacobsenPetersenOlsenPartner’s capital balance . . . . . . . . . . .$150,000$100,000$50,000Partner’s
Prepare a response to each of the following questions:1. Given the above information, what is the suggested value of Petersen’s interest in thepartnership?2. Petersen believes that there is significant additional value traceable to the partnership that isnot reflected in the above information. In particular, Petersen believes that the partnershiphas significant
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