Jacob and Kyle are partners in JK Construction Services. Their capital accounts are currently as follows:
$$\begin{array} { l r }
\text { Jacob } & \$ 460,000 \
\text { Kyle } &\underline{ 340,000} \
\text { Total capital } & \underline{\$ 800,000}
\end{array}$$ Jacob and Kyle share income equally. Partnership identifiable net assets are reported at amounts approximating fair value. Lester purchases a 25 percent interest in the partnership by paying Jacob and Kyle a total of $250,000 for 25 percent of each of their interests in the partnership.
Required
Record the addition of Lester to the partnership, using:
a. The transfer of capital interests method
b. The implied goodwill method

Question

Jacob and Kyle are partners in JK Construction Services. Their capital accounts are currently as follows:
 $$\begin{array} { l r } 
\text { Jacob } & \$ 460,000 \
\text { Kyle } &\underline{ 340,000} \
\text { Total capital } & \underline{\$ 800,000}
\end{array}$$ Jacob and Kyle share income equally. Partnership identifiable net assets are reported at amounts approximating fair value. Lester purchases a 25 percent interest in the partnership by paying Jacob and Kyle a total of $250,000 for 25 percent of each of their interests in the partnership.
Required
Record the addition of Lester to the partnership, using:
a. The transfer of capital interests method
b. The implied goodwill method

Quizplus · Accepted Answer

The Answer of Jacob and Kyle are partners in JK Construction Services. Their capital accounts are currently as follows:
 $$\begin{array} { l r } 
\text { Jacob } & \$ 460,000 \
\text { Kyle } &\underline{ 340,000} \
\text { Total capital } & \underline{\$ 800,000}
\end{array}$$ Jacob and Kyle share income equally. Partnership identifiable net assets are reported at amounts approximating fair value. Lester purchases a 25 percent interest in the partnership by paying Jacob and Kyle a total of $250,000 for 25 percent of each of their interests in the partnership.
Required
Record the addition of Lester to the partnership, using:
a. The transfer of capital interests method
b. The implied goodwill method

Jacob and Kyle Are Partners in JK Construction Services Jacob and Kyle Share Income Equally