The capital accounts of the Fax & Bel partnership on September 30, 2024, are: Partner (profit-and-loss sharing ratio) Capital Balance Fax Capital (70% profit percentage) 140,000 Bel Capital (30% profit percentage) 60,000 Total 200,000 On October 1, Rob was admitted to a 40% interest in the partnership when he purchased 40% of the existing partners’ capital for $120,000, paid directly to Fax and Bel. Determine the capital balances of Fax, Bel, and Rob after Rob’s admission to the partnership if goodwill is recorded, assuming that the book value and fair value of recorded assets are equal. Determine the capital balances of Fax, Bel, and Rob after Rob’s admission to the partnership if goodwill is not recorded.
The capital accounts of the Fax & Bel partnership on September 30, 2024, are: Partner (profit-and-loss sharing ratio) Capital Balance Fax Capital (70% profit percentage) 140,000 Bel Capital (30% profit percentage) 60,000 Total 200,000 On October 1, Rob was admitted to a 40% interest in the partnership when he purchased 40% of the existing partners’ capital for $120,000, paid directly to Fax and Bel. Determine the capital balances of Fax, Bel, and Rob after Rob’s admission to the partnership if goodwill is recorded, assuming that the book value and fair value of recorded assets are equal. Determine the capital balances of Fax, Bel, and Rob after Rob’s admission to the partnership if goodwill is not recorded.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The capital accounts of the Fax & Bel partnership on September 30, 2024, are:
|
Partner (profit-and-loss sharing ratio) |
Capital Balance |
|
Fax Capital (70% profit percentage) |
140,000 |
|
Bel Capital (30% profit percentage) |
60,000 |
|
Total |
200,000 |
On October 1, Rob was admitted to a 40% interest in the partnership when he purchased 40% of the existing partners’ capital for $120,000, paid directly to Fax and Bel.
- Determine the capital balances of Fax, Bel, and Rob after Rob’s admission to the partnership if
goodwill is recorded, assuming that the book value and fair value of recorded assets are equal. - Determine the capital balances of Fax, Bel, and Rob after Rob’s admission to the partnership if goodwill is not recorded.
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