Concept explainers
a
Incorporation of
Requirement 1
the entries for revaluation of assets and transfer of assets to A&B corporation.
b
Incorporation of partnership: a partnership may decide to incorporate the business to have access to additional equity financing, to limit partners personal liability, to obtain tax advantages, or to achieve a business purposes. At the incorporation partnership is terminated, and assets and liabilities are revalued to their fair value. The gain or loss on revaluation is allocated to partners’ capital accounts in profit and loss sharing ratio. Capital stock in new corporation is then distributed in proportion to the partners’ capital accounts.
Requirement 2
the entries in books of A&B corporation to record assets and issuance of stock
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Chapter 16 Solutions
EBK ADVANCED FINANCIAL ACCOUNTING
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Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT