Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Chapter 14, Problem 4.5E
To determine
Concept introduction
A procedure of paying off all the liabilities of the partnership firm, selling out all the respective assets of the partnership firm and then the distribution of the remaining assets and the cash when the partnership business is going out of the business is known as partnership liquidation.
To prepare: Responses about some advantages of the partnership acquiring P’s interest rather than selling to an individual.
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Petersen, one of your clients, has indicated that Jacobsen is interested in buying Petersen’s interest in the partnership. Relevant information: (attached)Petersen has asked you a number of questions regarding selling his interest in the partnership. It is important to note that the partners vote on partnership matters in the same proportion as their profit and loss percentages.Prepare a response to each of the following questions:1. Given the above information, what is the suggested value of Petersen’s interest in the partnership?2. Petersen believes that there is significant additional value traceable to the partnership that is not reflected in the above information. In particular, Petersen believes that the partnership has significant goodwill and feels that his interest in the partnership is worth $130,000. What amount of total entity goodwill is suggested by this value?3. If Petersen were to sell half of his interest in the partnership to Jacobsen and half to Olsen, why might the…
Which of the following statements is correct in relation to limited partners?
Select one:
a. Their liability is limited to the capital they have agreed to invest in the partnership
b. They have no liability for partnership debts
c. They have full liability for partnership debts.
Which of the following, in the context of entering into a contract, constitutes a binding offer to sell a unique item of furniture?
Select one:
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c. Telling someone the price you may be willing to accept for it
d. Telling someone you will reduce the marked price on it by 10%
A client of yours is considering investing in a partnership and has been analyzing the financial statements of the partnership. Their analysis has resulted in the following observations that that they are hoping you could address: 1. The balance sheet does not set forth the capital stock account at par value, which would define some level of minimum legal liability. 2. The balance sheet does not include any accrual for either state or federal income taxes even though the partnership reported pretax income. 3. In analyzing the income statement, your client noted that no salaries to partners were listed as an expense even though they know that existing partners received a salary from the partnership. 4. Interest on a partner’s capital balance is used as a means of allocating profits; however, no such interest appears on the income statement. Provide a response to each of your client’s observations regarding the partnership’s financial statements.
Chapter 14 Solutions
Advanced Accounting
Ch. 14 - Prob. 1UTICh. 14 - Prob. 2UTICh. 14 - Prob. 3UTICh. 14 - Prob. 4UTICh. 14 - Prob. 2ECh. 14 - Prob. 3ECh. 14 - Prob. 4.1ECh. 14 - Prob. 4.2ECh. 14 - Prob. 4.3ECh. 14 - Prob. 4.4E
Ch. 14 - Prob. 4.5ECh. 14 - Prob. 5.1ECh. 14 - Prob. 5.2ECh. 14 - Prob. 6ECh. 14 - Prob. 7.1ECh. 14 - Prob. 7.2ECh. 14 - Prob. 7.3ECh. 14 - Prob. 7.4ECh. 14 - Prob. 8.1ECh. 14 - Prob. 8.2ECh. 14 - Prob. 8.3ECh. 14 - Prob. 9.1ECh. 14 - Prob. 9.2ECh. 14 - Prob. 9.3ECh. 14 - Prob. 9.4ECh. 14 - Prob. 14.2.1PCh. 14 - Prob. 14.2.2PCh. 14 - Prob. 14.2.3PCh. 14 - Prob. 14.2.4PCh. 14 - Prob. 14.2.5PCh. 14 - Prob. 14.2.6PCh. 14 - Prob. 14.2.7PCh. 14 - Prob. 14.2.8PCh. 14 - Prob. 14.2.9PCh. 14 - Prob. 14.3.1PCh. 14 - Prob. 14.3.2PCh. 14 - Prob. 14.3.3PCh. 14 - Prob. 14.3.4PCh. 14 - Prob. 14.3.5PCh. 14 - Prob. 14.3.6PCh. 14 - Prob. 14.5PCh. 14 - Prob. 14.6PCh. 14 - Prob. 14.7P
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