Beruflich Dokumente
Kultur Dokumente
Partnerships –
Formation,
Operations, and
Changes in
Ownership
Interests
Interest allowance Weighted average method
Now assume that Dre and Boy, who have capital balances of
$40,000 each and share profits equally, agree to admit Cry to a
one-third interest in the capital and profits of a new partnership
for a cash investment of $50,000.
All three will have equal shares, and net assets are at fair value.
Goodwill will be recorded.
After re-
Before Re-valuation valuation Investment Final
Dre $40 $10 $50 $50
Boy 40 10 50 50
Cry $50 50
Total $80 $100 $150
Cash 50
Dre Capital 1
Boy Capital 1
Cry Capital 52
Bonus method, bonus to new partner
5: DEATH OR RETIREMENT
OF A PARTNER
Jus Capital 80
Cash 80
Jus Capital 80
Ann Capital 8
Mic Capital 4
Cash 92
Jus Capital 80
Goodwill 12
Cash 92
Jus Capital 92
Cash 92
The exiting partner is then paid the amount of his
capital account.
© Pearson Education Limited 2015 16-23
Payment less than capital balance
6: LIMITED
PARTNERSHIPS