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Admitting a new LLC member with bonus Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in all income and losses according to a 2:3 income-sharing ratio. Dr. Lin has been asked to join the LLC. Prior to admitting Lin, the assets of Alert Medical were revalued to reflect their current market values. The revaluation resulted in medical equipment being increased by $40,000. Prior to the revaluation, the equity balances for Abrams and Lipscomb were $154,000 and $208,000, respectively. a. Provide the journal entry for the asset revaluation. b. Provide the journal entry for the bonus under the following independent situations: 1. Lin purchased a 30% interest in Alert Medical, LLC, for $228,000. 2. Lin purchased a 25% interest in Alert Medical, LLC, for $124,000.
Accounting (Text Only)
Solutions
Accounting (Text Only)
Admitting a new LLC member with bonus
Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in all income and losses according to a 2:3 income-sharing ratio. Dr. Lin has been asked to join the LLC. Prior to admitting Lin, the assets of Alert Medical were revalued to reflect their current market values. The revaluation resulted in medical equipment being increased by $40,000. Prior to the revaluation, the equity balances for Abrams and Lipscomb were $154,000 and $208,000, respectively.
- a. Provide the journal entry for the asset revaluation.
- b. Provide the journal entry for the bonus under the following independent situations:
- 1. Lin purchased a 30% interest in Alert Medical, LLC, for $228,000.
- 2. Lin purchased a 25% interest in Alert Medical, LLC, for $124,000.
a.
Limited Liability Company
It is that form of organization which is formed as a legal entity that provides limited liability to the owners. It has a common seal.
To record: The journal entry for the asset revaluation.
Explanation of Solution
Working Note:
Calculation of share of partners in the revaluation profit
| Revaluation Profit = $40,000 |
| Profit sharing ratio = 2:3 |
b. 1
To provide: The journal entry
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