Disassociation of a partner:When a partner withdraws or retires from a
The
Disassociation of a partner:When a partner withdraws or retires from a partnership, that partner is disassociated from the partnership. In most cases, the partnership purchases the disassociated partner’s interest in the partnership for a buyout price. Section 701 of UPA 1997 states that the buyout price is the estimated amount if, the partnership assets were sold at a price equal to the higher of the liquidation value or the value based on a sale of entire business as a going concern without the disassociated partner and the partnership was wound up and all partnership obligations settled. The partnership must pay interest to the disassociated partner from the date of disassociation to date of payment.
The journal entry to record K’s withdrawal when K is paid $42,000 and only his share of goodwill is recorded.
Disassociation of a partner:When a partner withdraws or retires from a partnership, that partner is disassociated from the partnership. In most cases, the partnership purchases the disassociated partner’s interest in the partnership for a buyout price. Section 701 of UPA 1997 states that the buyout price is the estimated amount if, the partnership assets were sold at a price equal to the higher of the liquidation value or the value based on a sale of entire business as a going concern without the disassociated partner and the partnership was wound up and all partnership obligations settled. The partnership must pay interest to the disassociated partner from the date of disassociation to date of payment.
the journal entry to record K’s withdrawal when K is paid $35,000 and all implied goodwill is recorded.
Disassociation of a partner:When a partner withdraws or retires from a partnership, that partner is disassociated from the partnership. In most cases, the partnership purchases the disassociated partner’s interest in the partnership for a buyout price. Section 701 of UPA 1997 states that the buyout price is the estimated amount if, the partnership assets were sold at a price equal to the higher of the liquidation value or the value based on a sale of entire business as a going concern without the disassociated partner and the partnership was wound up and all partnership obligations settled. The partnership must pay interest to the disassociated partner from the date of disassociation to date of payment.
To explain:The computation of buyout price summarizing the guidelines in UPA 1997.
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Chapter 15 Solutions
ADVANCED FINANCIAL ACCOUNTING-ACCESS
- PLEASE HELParrow_forwardOne company might depreciate a new computer over three years while another company might depreciate the same model computer over five years...and both companies are right. True Falsearrow_forwardno chatgpAccumulated Depreciation will appear as a deduction within the section of the balance sheet labeled as Property, Plant and Equipment. True Falsearrow_forward
- No ai Depreciation Expense is shown on the income statement in order to achieve accounting's matching principle. True Falsearrow_forwardno aiOne company might depreciate a new computer over three years while another company might depreciate the same model computer over five years...and both companies are right. True Falsearrow_forwardno ai An asset's useful life is the same as its physical life? True Falsearrow_forward
- no ai Depreciation Expense reflects an allocation of an asset's original cost rather than an allocation based on the economic value that is being consumed. True Falsearrow_forwardThe purpose of depreciation is to have the balance sheet report the current value of an asset. True Falsearrow_forwardDepreciation Expense shown on a company's income statement must be the same amount as the depreciation expense on the company's income tax return. True Falsearrow_forward
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT