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The capital balances and profit and loss ratios of the partners in ABC Co. are as follows: Capital 40,000 60,000 80,000 P/L 40% A B 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? O 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 15,000 must be recorded, according to the PFRS

The capital balances and profit and loss ratios of the partners in ABC Co. are as follows: Capital 40,000 60,000 80,000 P/L 40% A B 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? O 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 15,000 must be recorded, according to the PFRS

FINANCIAL ACCOUNTING
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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The capital balances and profit and loss ratios of the partners in ABC Co. are as follows: Capital 40,000 60,000 P/L 40% A 30% 30% в 80,000 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 B45,000 will be made from the selling partners to D.
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 P/L 40% A 30% 30% в 80,000 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 B45,000 will be made from the selling partners to D.
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