Seth, Pete, Cara, and Jen form Kingfisher Corporation with the following consideration consideration transferred From Seth Inventory Basis of transferor $30,000 FMV $96,000 30 shares From Cara Basis of transferor $15,000 FMV $15,000 30 shares From Pete Basis of transfer $45,000 FMV $99,000 Depr of equip $30,000 30 shares *Seth receives $6,000 in cash in addition to the 30 shares.
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.
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- Seth, Pete, Cara, and Jen form Kingfisher Corporation with the following consideration
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- consideration transferred
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- From Seth
- Inventory Basis of transferor $30,000 FMV $96,000 30 shares
- From Cara Basis of transferor $15,000 FMV $15,000 30 shares
- From Pete Basis of transfer $45,000 FMV $99,000
- Depr of equip $30,000 30 shares
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*Seth receives $6,000 in cash in addition to the 30 shares.
- Seth's recognized gain or loss
- FMV-basis= 96,000-30,000=66,000 cash received = $6,000 lessor of the two =$6,000 Seth's recognized gain
- Seth's recognized gain or loss
- Seth’s basis in the Kingfisher Corporation stock.
- Basis of inventory given+ recognized gain = 30,000+6,000=36,000 basis of stock received or is it $30,000+6,000-6,000 $30,000 basis of stock
Corporation stock represents the capital of the company held in hands of the shareholders.
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