The Leo, Mark and Natalie Partnership had the following capital balances and profit/loss sharing percentages:
Newsome is going to buy into the partnership by paying $200,000 for a 20% ownership in the partnership.
Required:
1. If Newsome pays the partnership directly, what are the four partner capital balances immediately following Newsome's admission to the partnership using the bonus method? Assume the partnership assets are not revalued.
2. If Newsome pays the partnership directly, what are the four partner capital balances immediately following Newsome's admission to the partnership using the goodwill method? Assume the partnership assets are revalued. The $200,000 amount paid by Newsome is fair value for a 20% share of the partnership.

Question

The Leo, Mark and Natalie Partnership had the following capital balances and profit/loss sharing percentages:
  Newsome is going to buy into the partnership by paying $200,000 for a 20% ownership in the partnership.
Required:
1. If Newsome pays the partnership directly, what are the four partner capital balances immediately following Newsome's admission to the partnership using the bonus method? Assume the partnership assets are not revalued.
2. If Newsome pays the partnership directly, what are the four partner capital balances immediately following Newsome's admission to the partnership using the goodwill method? Assume the partnership assets are revalued. The $200,000 amount paid by Newsome is fair value for a 20% share of the partnership.

Quizplus · Accepted Answer

The Answer of The Leo, Mark and Natalie Partnership had the following capital balances and profit/loss sharing percentages:
  Newsome is going to buy into the partnership by paying $200,000 for a 20% ownership in the partnership.
Required:
1. If Newsome pays the partnership directly, what are the four partner capital balances immediately following Newsome's admission to the partnership using the bonus method? Assume the partnership assets are not revalued.
2. If Newsome pays the partnership directly, what are the four partner capital balances immediately following Newsome's admission to the partnership using the goodwill method? Assume the partnership assets are revalued. The $200,000 amount paid by Newsome is fair value for a 20% share of the partnership.

The Leo, Mark and Natalie Partnership Had the Following Capital