Brown and Zendaya enter into a partnership agreement in which Brown owns 60% of the capital and profits and Zendaya gets 40% of the capital and profits. Brown made the following contributions: Acquisition cost Fair value Equipment $20.000.000 $15,000,000 Building 100,000,000 60,000,000 Land 10,000,000 20,000,000 On the Building there are $30,000,000 mortgages that have been approved by the partnership. Zendaya contributed $50 million to the partnership. Brown and Zendaya agree that Zendaya's estimate should equal Zendaya's $50 million cash contribution and that goodwill should be recorded. Goodwill must be recorded at the amount a). 16,666,667 b). 10,000,000 c). 20,000,000 d). 15,000,000

SWFT Individual Income Taxes
43rd Edition
ISBN:9780357391365
Author:YOUNG
Publisher:YOUNG
Chapter20: Corporations And Parterships
Section: Chapter Questions
Problem 5BCRQ
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Brown and Zendaya enter into a partnership agreement in which Brown owns 60% of the capital and
profits and Zendaya gets 40% of the capital and profits. Brown made the following contributions:
Acquisition cost
Fair value
Equipment
$20.000.000
$15,000,000
Building
100,000,000
60,000,000
Land
10,000,000
20,000,000
On the Building there are $30,000,000 mortgages that have been approved by the
partnership. Zendaya contributed $50 million to the partnership. Brown and Zendaya agree that
Zendaya's estimate should equal Zendaya's $50 million cash contribution and that goodwill should
be recorded. Goodwill must be recorded at the amount
a). 16,666,667
b). 10,000,000
c). 20,000,000
d). 15,000,000
Transcribed Image Text:Brown and Zendaya enter into a partnership agreement in which Brown owns 60% of the capital and profits and Zendaya gets 40% of the capital and profits. Brown made the following contributions: Acquisition cost Fair value Equipment $20.000.000 $15,000,000 Building 100,000,000 60,000,000 Land 10,000,000 20,000,000 On the Building there are $30,000,000 mortgages that have been approved by the partnership. Zendaya contributed $50 million to the partnership. Brown and Zendaya agree that Zendaya's estimate should equal Zendaya's $50 million cash contribution and that goodwill should be recorded. Goodwill must be recorded at the amount a). 16,666,667 b). 10,000,000 c). 20,000,000 d). 15,000,000
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