Partnership It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio. Revaluation of assets Prior to the admission of new partners in the firm, all assets of the firm are stated in the current value or in the adjusted value. Due to revaluation any net increase or decrease in the asset value is treated as revaluation profit and loss respectively. Revaluation profit or loss is shared among the existing partners. To provide: The journal entry for revaluation of Equipment.

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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…

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Chapter 12, Problem 12.3BPE

a.

To determine

Partnership

It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio.

Revaluation of assets

Prior to the admission of new partners in the firm, all assets of the firm are stated in the current value or in the adjusted value. Due to revaluation any net increase or decrease in the asset value is treated as revaluation profit and loss respectively. Revaluation profit or loss is shared among the existing partners.

To provide: The journal entry for revaluation of Equipment.

b.

To determine

To provide: The journal entry to admit L.

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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…

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