Answered: Henry (50% of gains and Thomas (30%)…

Business

Accounting

Henry (50% of gains and Thomas (30%) .... Catherine (20%)... $ 135,000 85,000 80,000 losses)

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter4: Gross Income

Section: Chapter Questions

Problem 2CE

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Concept explainers

Partnership Accounting

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

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.

Question

A partnership has the following capital balances:

Anne is going to invest $125,000 into the business to acquire a 40 percent ownership interest. Goodwill is to be recorded. What will be Anne’s beginning capital balance?

$125,000
$170,000
$200,000
$245,000

Henry (50% of gains and
Thomas (30%) ....
Catherine (20%)...
$ 135,000
85,000
80,000
losses)

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

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