E 16-12 Partner retirement entries—Fair value adjustment A balance sheet at December 31, 2016, for the Bec, Dee, and Lyn partnership is summarized as follows: Assets $800,000 Liabilities $200,000 Loan to Dee 100,000 Bec capital (50%) 300,000 $900,000 Dee capital (40%) 300,000 Lyn capital (10%) 100,000 $900,000 Dee is retiring from the partnership. The partners agree that partnership assets, excluding Dee’s loan, should be adjusted to their fair value of $1,000,000 and that Dee should receive $310,000 for her capital balance net of the $100,000 loan. The bonus approach is used; therefore, no goodwill is recorded. Required Determine the capital balances of Bec and Lyn immediately after Dee’s retirement.
E 16-12 Partner retirement entries—Fair value adjustment A balance sheet at December 31, 2016, for the Bec, Dee, and Lyn partnership is summarized as follows: Assets $800,000 Liabilities $200,000 Loan to Dee 100,000 Bec capital (50%) 300,000 $900,000 Dee capital (40%) 300,000 Lyn capital (10%) 100,000 $900,000 Dee is retiring from the partnership. The partners agree that partnership assets, excluding Dee’s loan, should be adjusted to their fair value of $1,000,000 and that Dee should receive $310,000 for her capital balance net of the $100,000 loan. The bonus approach is used; therefore, no goodwill is recorded. Required Determine the capital balances of Bec and Lyn immediately after Dee’s retirement.
Accounting (Text Only)
26th Edition
ISBN:9781285743615
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter12: Accounting For Partnerships And Limited Liability Companies
Section: Chapter Questions
Problem 12.3BPR
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E 16-12 Partner retirement entries—Fair value adjustment
A balance sheet at December 31, 2016, for the Bec, Dee, and Lyn
|
Assets |
$800,000 |
Liabilities |
$200,000 |
|
Loan to Dee |
100,000 |
Bec capital (50%) |
300,000 |
|
|
$900,000 |
Dee capital (40%) |
300,000 |
|
|
|
Lyn capital (10%) |
100,000 |
|
|
|
|
$900,000 |
Dee is retiring from the partnership. The partners agree that partnership assets, excluding Dee’s loan, should be adjusted to their fair value of $1,000,000 and that Dee should receive $310,000 for her capital balance net of the $100,000 loan. The bonus approach is used; therefore, no
Required
Determine the capital balances of Bec and Lyn immediately after Dee’s retirement.
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