Answered: goodwill will be recorded

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter10: Partnerships: Formation, Operation, And Basis

Section: Chapter Questions

Problem 59P

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Yuca has decided to retire from the partnership of Yuca, Batata, and Ñame. The partnership will pay Yuca $400,000. Total partnership capital should be revalued based on the excess payment to Yuca. The book values of the assets equals fair values. Yuca, Batata, and Ñame share profits and losses in a ratio of 1:1:3, respectively. Capital balances are:

Yuca, Capital: $320,000

Batata, Capital: $280,000

Ñame, Capital: $600,000

What goodwill will be recorded?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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