Boon, Chakan and Decha form a partnership in which they will share capital in a 5:3:2 ratio. The fair value of net assets invested by each partner is as follows:
•Boon contributes $100,000 in cash and $125,000 in inventory.
•Chakan contributes $50,000 in cash, $45,000 in inventory, and equipment valued at $150,000. The partnership assumes a loan secured by the equipment, in the amount of $75,000.
•Decha contributes $60,000 in cash and a building valued at $250,000. The partnership assumes a loan secured by the building, in the amount of $130,000.
Required
Prepare the balance sheet of the partnership at the date of formation using:
a. The bonus approach
b. The goodwill approach

Question

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The Answer of Boon, Chakan and Decha form a partnership in which they will share capital in a 5:3:2 ratio. The fair value of net assets invested by each partner is as follows:
•Boon contributes $100,000 in cash and $125,000 in inventory.
•Chakan contributes $50,000 in cash, $45,000 in inventory, and equipment valued at $150,000. The partnership assumes a loan secured by the equipment, in the amount of $75,000.
•Decha contributes $60,000 in cash and a building valued at $250,000. The partnership assumes a loan secured by the building, in the amount of $130,000.
Required
Prepare the balance sheet of the partnership at the date of formation using:
a. The bonus approach
b. The goodwill approach

Boon, Chakan and Decha Form a Partnership in Which They