flaccounting
Sep 9, 2009, 01:15 PM
Able, Baker, and Charlie share profits and losses in a ratio of 2:3:5,
respectively.
Assets
Cash $ 100,000
Inventory 125,000
Marketable securities 200,000
Land 100,000
Building-net 500,000
Total assets $ 1,025,000
Equities
Able, capital $ 425,000
Baker, capital 400,000
Charlie, capital 200,000
Total equities $ 1,025,000
The partners agree to admit Delta for a one-fifth interest. The fair market value of partnership land is appraised at $200,000 and the fair market value of inventory is $175,000. The assets are to be revalued prior to the admission of Delta and there is $30,000 of goodwill that attaches to the old partnership.
1) By how much will the capital accounts of Able, Baker, and Charlie increase, respectively, due to the revaluation of the assets and the recognition of goodwill?
2) How much cash will Delta have to invest to acquire a one-fifth interest?
3) What will the profit and loss sharing ratios be after Delta’s investment?
respectively.
Assets
Cash $ 100,000
Inventory 125,000
Marketable securities 200,000
Land 100,000
Building-net 500,000
Total assets $ 1,025,000
Equities
Able, capital $ 425,000
Baker, capital 400,000
Charlie, capital 200,000
Total equities $ 1,025,000
The partners agree to admit Delta for a one-fifth interest. The fair market value of partnership land is appraised at $200,000 and the fair market value of inventory is $175,000. The assets are to be revalued prior to the admission of Delta and there is $30,000 of goodwill that attaches to the old partnership.
1) By how much will the capital accounts of Able, Baker, and Charlie increase, respectively, due to the revaluation of the assets and the recognition of goodwill?
2) How much cash will Delta have to invest to acquire a one-fifth interest?
3) What will the profit and loss sharing ratios be after Delta’s investment?