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Subject Topic: Question on partnership accounting (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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decidedtobecpa
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Posted: 05 May 2011 at 11:22 | IP Logged  

Can someone help me with this problem-

The capital accounts of the partnership of Newton, Sharman, and Jackson on June 1, 2010, are presented below with their respective profit and loss ratios.

Newton

$139,200

1/2

Sharman

 208,800

1/3

Jackson

  96,000

1/6

 

$444,000

 

On June 1, 2010, Sidney was admitted to the partnership when he purchased, for $132,000, a proportionate interest from Newton and Sharman in the net assets and profits of the partnership.  As a result of this transaction, Sidney acquired a one-fifth interest in the net assets and profits of the firm.  Assuming that implied goodwill is not to be recorded, what is the combined gain realized by Newton and Sharman upon the sale of a portion of their interests in the partnership to Sidney?

< ="mc" name="mc90733" id="mc6927" value="6927 " ="">
< ="mc" name="mc90733" id="mc6928" value="6928 " ="">
< ="mc" name="mc90733" id="mc6929" value="6929 " ="">
< ="mc" name="mc90733" id="mc6930" value="6930 " ="">
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decidedtobecpa
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Posted: 05 May 2011 at 11:23 | IP Logged  

Correct answer is 43200.

Why is new partners consideration not included in calculation?
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Alex2008
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Posted: 05 May 2011 at 16:41 | IP Logged  

http://www.cpanet.com/cpa_forum/forum_posts.asp?TID=31502&am p;PN=73
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decidedtobecpa
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Posted: 06 May 2011 at 15:04 | IP Logged  

Oh wow, thanks for sharing this with me.

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