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 1 the entries for revaluation of assets and transfer of assets to A&B corporation.

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Answer 1

Question

Chapter 16, Problem 16.10E

a

To determine

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 1

the entries for revaluation of assets and transfer of assets to A&B corporation.

b

To determine

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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Geisner Inc. has total assets of $1,000,000 and total liabilities of $600,000. The industry average debt-to-equity ratio is 1.20. Calculate Geisner's debt-to-equity ratio and indicate whether the company's default risk is higher or lower than the average of other companies in the industry.

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Baker's Market began the current month with inventory costing $35,250, then purchased additional inventory at a cost of $78,400. The perpetual inventory system indicates that inventory costing $82,500 was sold during the month for $88,250. An inventory count at month-end shows that inventory costing $29,000 is actually on hand. What amount of shrinkage occurred during the month? a) $350 b) $1,150 c) $1,750 d) $2,150

Answer 2

Question

Chapter 16, Problem 16.10E

a

To determine

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 1

the entries for revaluation of assets and transfer of assets to A&B corporation.

b

To determine

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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Answer 3

Question

Chapter 16, Problem 16.10E

a

To determine

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 1

the entries for revaluation of assets and transfer of assets to A&B corporation.

b

To determine

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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Answer 4

Question

Chapter 16, Problem 16.10E

a

To determine

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 1

the entries for revaluation of assets and transfer of assets to A&B corporation.

b

To determine

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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Answer 5

Chapter 16, Problem 16.10E

a

To determine

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 1

the entries for revaluation of assets and transfer of assets to A&B corporation.

b

To determine

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

Answer 6

Chapter 16, Problem 16.10E

a

To determine

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 1

the entries for revaluation of assets and transfer of assets to A&B corporation.

Answer 7

Chapter 16, Problem 16.10E

a

To determine

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 1

the entries for revaluation of assets and transfer of assets to A&B corporation.

Answer 8

b

To determine

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

Answer 9

b

To determine

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

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 16 - What are the major causes of a dissolution? What...Ch. 16 - Prob. 16.2Q Ch. 16 - Prob. 16.3Q Ch. 16 - Prob. 16.4Q Ch. 16 - Contrast a lump-sum liquidation with an...Ch. 16 - Prob. 16.6Q Ch. 16 - Prob. 16.7Q Ch. 16 - Prob. 16.8Q Ch. 16 - Prob. 16.9Q Ch. 16 - Prob. 16.10Q

Solution Summary: The author explains that a partnership may incorporate the business to have access to additional equity financing, to limit partners personal liability, or to obtain tax advantages.

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