Akashi, Bin, Chion and Daigo form a partnership in which they will share capital in a 1:3:4:2 ratio. The fair value of net assets invested by each partner is as follows:
$$\begin{array} { l r }
\text { Akashi } & \$ 400,000 \
\text { Bin } & 500,000 \
\text { Chion } & 600,000 \
\text { Daigo } & 300,000
\end{array}$$ Required
Calculate the balance in each partner's capital account at the formation of the partnership using:
a. The bonus approach
b. The goodwill approach

Question

Akashi, Bin, Chion and Daigo form a partnership in which they will share capital in a 1:3:4:2 ratio. The fair value of net assets invested by each partner is as follows:
 $$\begin{array} { l r } 
\text { Akashi } & \$ 400,000 \
\text { Bin } & 500,000 \
\text { Chion } & 600,000 \
\text { Daigo } & 300,000
\end{array}$$ Required
Calculate the balance in each partner's capital account at the formation of the partnership using:
a. The bonus approach
b. The goodwill approach

Quizplus · Accepted Answer

The Answer of Akashi, Bin, Chion and Daigo form a partnership in which they will share capital in a 1:3:4:2 ratio. The fair value of net assets invested by each partner is as follows:
 $$\begin{array} { l r } 
\text { Akashi } & \$ 400,000 \
\text { Bin } & 500,000 \
\text { Chion } & 600,000 \
\text { Daigo } & 300,000
\end{array}$$ Required
Calculate the balance in each partner's capital account at the formation of the partnership using:
a. The bonus approach
b. The goodwill approach