Bonus method: This method records an increase in the partnership ’s total capital only to the extent of investment of new partner in accordance with GAAP. In some cases, the existing partner assign some of their capital to a new partner, and in some cases, a new partner agrees to assign a portion of his or her capital interest to the existing partners. To choose: the correct answer to determine amount to be recorded as capital for W and M at the partnership formation.

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Answer 1

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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 15, Problem 15.16.3P

To determine

Bonus method:This method records an increase in the partnership’s total capital only to the extent of investment of new partner in accordance with GAAP. In some cases, the existing partner assign some of their capital to a new partner, and in some cases, a new partner agrees to assign a portion of his or her capital interest to the existing partners.

To choose:the correct answer to determine amount to be recorded as capital for W and M at the partnership formation.

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Nestle Resources acquired land on July 15, 2019, at a cost of $875,000. The company estimated that a total of 45,000 tons of mineral was available for mining. After extracting all the natural resources, the company will be required to restore the property to its original condition due to environmental regulations. It estimates the fair value of this restoration obligation at $95,000. The company expects to sell the property afterwards for $115,000. Before beginning mining operations, the company incurred developmental costs of $180,000. During 2019, the company extracted 20,000 tons of resources. It sold 15,000 tons. Compute the following information for 2019: a) Per unit mineral cost b) Total material cost of December 31, 2019, inventory c) Total material cost in cost of goods sold at December 31, 2019

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 15, Problem 15.16.3P

To determine

Bonus method:This method records an increase in the partnership’s total capital only to the extent of investment of new partner in accordance with GAAP. In some cases, the existing partner assign some of their capital to a new partner, and in some cases, a new partner agrees to assign a portion of his or her capital interest to the existing partners.

To choose:the correct answer to determine amount to be recorded as capital for W and M at the partnership formation.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

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 15, Problem 15.16.3P

To determine

Bonus method:This method records an increase in the partnership’s total capital only to the extent of investment of new partner in accordance with GAAP. In some cases, the existing partner assign some of their capital to a new partner, and in some cases, a new partner agrees to assign a portion of his or her capital interest to the existing partners.

To choose:the correct answer to determine amount to be recorded as capital for W and M at the partnership formation.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

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 15, Problem 15.16.3P

To determine