Ethical Case Study Case Summary: Dr. B and Dr. R are sole owners of two medical practices that operate in the same medical building. The two doctors agree to combine assets and liabilities of the two businesses to form a partnership . As per the partnership agreement the income will be divided equally between two doctors. After several months of partnership a conversation took place between the two partners, where Dr. B said Dr. R that he had noticed that the patient load of Dr. R has dropped over the last couple of months. When they formed partnership they both were seeing same number of patients per week, but the present patient record of Dr. R shows that he is seeing half as many as patients seeing by Dr. B. So Dr. B enquired if there is any issue with Dr. R which he should be aware of. Dr. R responded that there was no issue and one of his reasons of joining partnership was that he wanted to enjoy his life little more and scale back a little bit. To which Dr. B said that he is working as hard as when he was on his own, but making less money than previously. He said both of them sharing half of each other billings, and as Dr. R is working less than him so he is ending up on the short end of the bargain. Dr. R responded that it’s the agreement, and partnership is based on 50/50 split. To which Dr. B replied that it should be applied to the effort end of the equation as that is applied to the income end. To discuss: If Dr. R is acting in ethical manner and how Dr. B can renegotiate the partnership agreement to avoid the dispute?

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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

Chapter 12, Problem 12.1CP

To determine

Ethical Case Study

Case Summary:

Dr. B and Dr. R are sole owners of two medical practices that operate in the same medical building. The two doctors agree to combine assets and liabilities of the two businesses to form a partnership. As per the partnership agreement the income will be divided equally between two doctors. After several months of partnership a conversation took place between the two partners, where Dr. B said Dr. R that he had noticed that the patient load of Dr. R has dropped over the last couple of months. When they formed partnership they both were seeing same number of patients per week, but the present patient record of Dr. R shows that he is seeing half as many as patients seeing by Dr. B. So Dr. B enquired if there is any issue with Dr. R which he should be aware of. Dr. R responded that there was no issue and one of his reasons of joining partnership was that he wanted to enjoy his life little more and scale back a little bit. To which Dr. B said that he is working as hard as when he was on his own, but making less money than previously. He said both of them sharing half of each other billings, and as Dr. R is working less than him so he is ending up on the short end of the bargain. Dr. R responded that it’s the agreement, and partnership is based on 50/50 split. To which Dr. B replied that it should be applied to the effort end of the equation as that is applied to the income end.

To discuss: If Dr. R is acting in ethical manner and how Dr. B can renegotiate the partnership agreement to avoid the dispute?

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Consolidation after Several Years On January 1, 2016, Adams Corporation acquired all of the stock of Baker Company. The fair value of Adams’ shares used in the exchange was $37,500,000. At the time of acquisition, the book value of Baker’s shareholders’ equity was $5,000,000, and the book value of Baker’s building (25-year life) exceeded its fair value by $1,000,000. From the date of acquisition to December 31, 2021, Baker had cumulative net income of $1,300,000. For 2022, Baker reported net income of $300,000. Adams uses the complete equity method to account for its investment in Baker. There is no goodwill impairment loss for the period 2016 through 2021, but there is impairment loss of $100,000 in 2022. Baker declared no dividends during the period 2016–2022. Required Prepare the working paper eliminating entries necessary to consolidate the financial statements of Adams and Baker at December 31, 2022. Enter numerical answers using all zeros (do not abbreviate in thousands or in…

Answer 2

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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

Chapter 12, Problem 12.1CP

To determine

Ethical Case Study

Case Summary:

Dr. B and Dr. R are sole owners of two medical practices that operate in the same medical building. The two doctors agree to combine assets and liabilities of the two businesses to form a partnership. As per the partnership agreement the income will be divided equally between two doctors. After several months of partnership a conversation took place between the two partners, where Dr. B said Dr. R that he had noticed that the patient load of Dr. R has dropped over the last couple of months. When they formed partnership they both were seeing same number of patients per week, but the present patient record of Dr. R shows that he is seeing half as many as patients seeing by Dr. B. So Dr. B enquired if there is any issue with Dr. R which he should be aware of. Dr. R responded that there was no issue and one of his reasons of joining partnership was that he wanted to enjoy his life little more and scale back a little bit. To which Dr. B said that he is working as hard as when he was on his own, but making less money than previously. He said both of them sharing half of each other billings, and as Dr. R is working less than him so he is ending up on the short end of the bargain. Dr. R responded that it’s the agreement, and partnership is based on 50/50 split. To which Dr. B replied that it should be applied to the effort end of the equation as that is applied to the income end.

To discuss: If Dr. R is acting in ethical manner and how Dr. B can renegotiate the partnership agreement to avoid the dispute?

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Answer 3

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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

Chapter 12, Problem 12.1CP

To determine

Ethical Case Study

Case Summary:

Dr. B and Dr. R are sole owners of two medical practices that operate in the same medical building. The two doctors agree to combine assets and liabilities of the two businesses to form a partnership. As per the partnership agreement the income will be divided equally between two doctors. After several months of partnership a conversation took place between the two partners, where Dr. B said Dr. R that he had noticed that the patient load of Dr. R has dropped over the last couple of months. When they formed partnership they both were seeing same number of patients per week, but the present patient record of Dr. R shows that he is seeing half as many as patients seeing by Dr. B. So Dr. B enquired if there is any issue with Dr. R which he should be aware of. Dr. R responded that there was no issue and one of his reasons of joining partnership was that he wanted to enjoy his life little more and scale back a little bit. To which Dr. B said that he is working as hard as when he was on his own, but making less money than previously. He said both of them sharing half of each other billings, and as Dr. R is working less than him so he is ending up on the short end of the bargain. Dr. R responded that it’s the agreement, and partnership is based on 50/50 split. To which Dr. B replied that it should be applied to the effort end of the equation as that is applied to the income end.

To discuss: If Dr. R is acting in ethical manner and how Dr. B can renegotiate the partnership agreement to avoid the dispute?

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Answer 4

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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

Chapter 12, Problem 12.1CP

To determine