Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances. To discuss: The differences in accounts used and valuations expected in the balance sheets of corporation and partnership.

Question

Want to see the full answer?

Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 16, Problem 16.3C

a.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences in accounts used and valuations expected in the balance sheets of corporation and partnership.

b.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences that would be expected in a comparison of the income statements of proposed corporation with that of partnership.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Admitting New Partner Who Contributes Assets After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $93, 000 and $ 130,000, respectively. Lewan Gorman is to be admitted to the partnership, contributing $62,000 cash to the partnership, for which he is to receive an ownership equity of $81,000. All partners share equally in income. Question Content Area a. Journalize the entry to record the admission of Gorman, who is to receive a bonus of $19,000. If an amount box does not require an entry, leave it blank. blank Cash 62,000 Lewan Gorman, Drawing 81,000 Harry Barge, Capital 19,000 Lewan Gorman, Capital 81,000 Question Content Area b. What are the capital balances of each partner after the admission of the new partner? Partner Balance Grayson Jackson Sfill in the blank a4bbb009305cfea_1 155,000 Harry Barge Sfill in the blank a4bbb009305 cfea_2 11,000 Lewan Gorman Sfill in the blank a4bbb009305cfea_3…

Admission of new partner-Goodwill Method Assume that Partners A and B each report a Capital Account of $300,000. Partner C wants to join the partnership as an equal one-third partner. Because the partnership has been very profitable, Partners A and B require Partner C to contribute $600,000 in cash to the partnership in return for a one-third interest. Assume that Partners A and B share profits 60% and 40%, respectively, prior to the admission of Partner C. Assume that the partners believe that the payment by Partner C provides evidence of a previously unrecorded intangible asset in the partnership and the partners wish to record the intangible on the post- realignment partnership balance sheet. After admission of Partner C, Partners A and B retain their relative proportion of profit allocation after granting Partner C a 30% profit-allocation interest. Use the Goodwill Method to record the journal entry on the books of the partnership to reflect the admission of Partner C. Description…

Admitting New Partner Who Contributes Assets After the tangible assets have been adjusted to current market prices, the capital accounts of Elayne Summers and Murv Newcomb have balances of $82,000 and $131,000, respectively. Rose Clayton is to be admitted to the partnership, contributing $55,000 cash to the partnership, for which she is to receive an ownership equity of $72,000. All partners share equally in income. a. Journalize the entry to record the admission of Rose Clayton, who is to receive a bonus of $17,000. If an amount box does not require an entry, leave it blank. Cash Elayne Summers, Capital Murv Newcomb, Capital Rose Clayton, Capital Feedback ►Check My Work b. What are the capital balances of each partner after the admission of the new partner? Partner Elayne Summers Murv Newcomb Rose Clayton 55,000 $ Balance 94,500 X $ 143,500 X 30,000 X

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 16, Problem 16.3C

a.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences in accounts used and valuations expected in the balance sheets of corporation and partnership.

b.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences that would be expected in a comparison of the income statements of proposed corporation with that of partnership.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 16, Problem 16.3C

a.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences in accounts used and valuations expected in the balance sheets of corporation and partnership.

b.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences that would be expected in a comparison of the income statements of proposed corporation with that of partnership.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 16, Problem 16.3C

a.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences in accounts used and valuations expected in the balance sheets of corporation and partnership.

b.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences that would be expected in a comparison of the income statements of proposed corporation with that of partnership.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 16, Problem 16.3C

a.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences in accounts used and valuations expected in the balance sheets of corporation and partnership.

b.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences that would be expected in a comparison of the income statements of proposed corporation with that of partnership.

Answer 6

Chapter 16, Problem 16.3C

a.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences in accounts used and valuations expected in the balance sheets of corporation and partnership.

Answer 7

Chapter 16, Problem 16.3C

a.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences in accounts used and valuations expected in the balance sheets of corporation and partnership.

Answer 8

b.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences that would be expected in a comparison of the income statements of proposed corporation with that of partnership.

Answer 9

b.

To determine

Concept introduction:

Incorporation of a partnership: When a partnership business has good prospects of growth, the partners may go for the incorporation of the business which gives them access to additional equity financing. It also allows partners to limit their personal liability and the chance of having tax benefits. When partners decide on incorporation, the partnership has to be terminated and revaluation of business has to be carried out. The profit and loss on revaluation are distributed to partners’ in their profit and loss sharing ratio. Capital stock in the new corporation is distributed to the partners in proportion to their capital account balances.

To discuss: The differences that would be expected in a comparison of the income statements of proposed corporation with that of partnership.

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

Want to see the full answer?

Check out a sample textbook solution

See solution

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 the differences in accounts used and valuations expected in the balance sheets of corporation and partnership.

Concept explainers

Want to see the full answer?

Chapter 16 Solutions