Accounting for the formation of partnership : at the formation of partnership, all the partners contributes agreed value of cash and noncash assets, it is necessary to assign a proper value to the noncash assets and liabilities contributed by partners. The partnership must clearly distinguish between capital contributions and loans made to the partnership by individual partners. The individual partners must agree to the percentage of equity that each will have in the partnership’s net assets. Generally the capital balance is determined by proportionate share of each partner’s capital contribution. Revaluation method: under this method of valuation of capital: Increase the book values of existing net assets to their market values. Record unrecognized goodwill . Increase the existing partner’s capital accounts for their respective shares of the increase in the book values of the net assets and the recorded goodwill. The partnership’s total resulting capital reflects the existing capital balances plus the amount of revaluation plus the new partner’s investment. To choose: the correct answer to determine initial capital by N.

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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 15.16.5P

To determine

Accounting for the formation of partnership:at the formation of partnership, all the partners contributes agreed value of cash and noncash assets, it is necessary to assign a proper value to the noncash assets and liabilities contributed by partners. The partnership must clearly distinguish between capital contributions and loans made to the partnership by individual partners.

The individual partners must agree to the percentage of equity that each will have in the partnership’s net assets. Generally the capital balance is determined by proportionate share of each partner’s capital contribution.

Revaluation method: under this method of valuation of capital:

Increase the book values of existing net assets to their market values.

Record unrecognized goodwill.

Increase the existing partner’s capital accounts for their respective shares of the increase in the book values of the net assets and the recorded goodwill.

The partnership’s total resulting capital reflects the existing capital balances plus the amount of revaluation plus the new partner’s investment.

To choose:the correct answer to determine initial capital by N.

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Cooper Audio Systems produces car sound systems. Estimated sales (in units) are 45,000 in April, 38,000 in May, and 36,500 in June. Each unit is priced at $75. Cooper wants to have 40% of the following month's sales in ending inventory. That requirement was met on April 1. Each sound system requires 4 speakers and 10 feet of wiring. Speakers cost $6 each, and wiring is $0.50 per foot. Cooper wants to have 25% of the following month's production needs in ending raw materials inventory. On April 1, Cooper had 30,000 speakers and 95,000 feet of wire in inventory. What is Cooper's expected sales revenue for May?

Answer 2

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 15.16.5P

To determine

Accounting for the formation of partnership:at the formation of partnership, all the partners contributes agreed value of cash and noncash assets, it is necessary to assign a proper value to the noncash assets and liabilities contributed by partners. The partnership must clearly distinguish between capital contributions and loans made to the partnership by individual partners.

The individual partners must agree to the percentage of equity that each will have in the partnership’s net assets. Generally the capital balance is determined by proportionate share of each partner’s capital contribution.

Revaluation method: under this method of valuation of capital:

Increase the book values of existing net assets to their market values.

Record unrecognized goodwill.

Increase the existing partner’s capital accounts for their respective shares of the increase in the book values of the net assets and the recorded goodwill.

The partnership’s total resulting capital reflects the existing capital balances plus the amount of revaluation plus the new partner’s investment.

To choose:the correct answer to determine initial capital by N.

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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 15.16.5P

To determine

Accounting for the formation of partnership:at the formation of partnership, all the partners contributes agreed value of cash and noncash assets, it is necessary to assign a proper value to the noncash assets and liabilities contributed by partners. The partnership must clearly distinguish between capital contributions and loans made to the partnership by individual partners.

The individual partners must agree to the percentage of equity that each will have in the partnership’s net assets. Generally the capital balance is determined by proportionate share of each partner’s capital contribution.

Revaluation method: under this method of valuation of capital:

Increase the book values of existing net assets to their market values.

Record unrecognized goodwill.

Increase the existing partner’s capital accounts for their respective shares of the increase in the book values of the net assets and the recorded goodwill.

The partnership’s total resulting capital reflects the existing capital balances plus the amount of revaluation plus the new partner’s investment.

To choose:the correct answer to determine initial capital by N.

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 15.16.5P

To determine