Lee, Alverez, and Tyne have a partnership. Their capital balances are $50,000, $70,000 and $30,000, respectively. The partner profit percentages are 30%, 40%, and 30%, respectively. They are considering on what basis to admit Patton, a prospective new partner. Based on appraisal analysis, the net assets of the partnership are worth $180,000. Patton is willing to put up cash of $30,000, plus a machine with book value of $12,000 and a fair value of $20,000.
Required:
Calculate, using the goodwill method, what the partnership balances will be if the existing partners recognize the differential between fair value and book value of the partnership's net assets as goodwill. What will Patton's percentage of partnership capital be, assuming the above deal goes through?

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The Answer of Lee, Alverez, and Tyne have a partnership. Their capital balances are $50,000, $70,000 and $30,000, respectively. The partner profit percentages are 30%, 40%, and 30%, respectively. They are considering on what basis to admit Patton, a prospective new partner. Based on appraisal analysis, the net assets of the partnership are worth $180,000. Patton is willing to put up cash of $30,000, plus a machine with book value of $12,000 and a fair value of $20,000.
Required:
Calculate, using the goodwill method, what the partnership balances will be if the existing partners recognize the differential between fair value and book value of the partnership's net assets as goodwill. What will Patton's percentage of partnership capital be, assuming the above deal goes through?

Lee, Alverez, and Tyne Have a Partnership