The capital balances and profit and loss ratios of the partners in ABC Co. are as follows: Capital 40,000 P/L 40% A B 60,000 80,000 30% 30% Total 180,000 D purchases 25% of A's, B's and C's capital interests for P60,000. The partners used the 'book value method' to record D's admission. Which of the following statements is most likely to be correct? The partnership's total equity increases after recording D's admission. The admission of D is accounted for as a transaction between D and the partnership. Goodwill of P15,000 must be recorded, according to the PFRS An equity transfer of P45,000 will be made from the selling partners to D.
The capital balances and profit and loss ratios of the partners in ABC Co. are as follows: Capital 40,000 P/L 40% A B 60,000 80,000 30% 30% Total 180,000 D purchases 25% of A's, B's and C's capital interests for P60,000. The partners used the 'book value method' to record D's admission. Which of the following statements is most likely to be correct? The partnership's total equity increases after recording D's admission. The admission of D is accounted for as a transaction between D and the partnership. Goodwill of P15,000 must be recorded, according to the PFRS An equity transfer of P45,000 will be made from the selling partners to D.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The capital balances and profit and loss ratios of the partners in ABC Co. are as follows:
Capital
40,000
60,000
80,000
180,000
P/L
40%
A
B
30%
30%
Total
D purchases 25% of A's, B's and C's capital interests for P60,000. The partners used the 'book
value method' to record D's admission. Which of the following statements is most likely to be
correct?
The partnership's total equity increases after recording D's admission.
The admission of D is accounted for as a transaction between D and the partnership.
Goodwill of P15,000 must be recorded, according to the PFRS
O An equity transfer of P45,000 will be made from the selling partners to D.
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