Accounting for the formation of partnership : at the formation of partnership, all the partners contributes agreed value of cash and noncash assets, it is necessary to assign a proper value to the noncash assets and liabilities contributed by partners. The partnership must clearly distinguish between capital contributions and loans made to the partnership by individual partners. The individual partners must agree to the percentage of equity that each will have in the partnership’s net assets. Generally the capital balance is determined by proportionate share of each partner’s capital contribution. Revaluation method: under this method of valuation of capital: Increase the book values of existing net assets to their market values. Record unrecognized goodwill . Increase the existing partner’s capital accounts for their respective shares of the increase in the book values of the net assets and the recorded goodwill. The partnership’s total resulting capital reflects the existing capital balances plus the amount of revaluation plus the new partner’s investment. To choose: the correct answer to determine initial capital by N.

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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.

Chapter 15, Problem 15.16.5P

To determine

Accounting for the formation of partnership:at the formation of partnership, all the partners contributes agreed value of cash and noncash assets, it is necessary to assign a proper value to the noncash assets and liabilities contributed by partners. The partnership must clearly distinguish between capital contributions and loans made to the partnership by individual partners.

The individual partners must agree to the percentage of equity that each will have in the partnership’s net assets. Generally the capital balance is determined by proportionate share of each partner’s capital contribution.

Revaluation method: under this method of valuation of capital:

Increase the book values of existing net assets to their market values.

Record unrecognized goodwill.

Increase the existing partner’s capital accounts for their respective shares of the increase in the book values of the net assets and the recorded goodwill.

The partnership’s total resulting capital reflects the existing capital balances plus the amount of revaluation plus the new partner’s investment.

To choose:the correct answer to determine initial capital by N.

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Problem 1. Alucard and Chou organized their partnership on 01/01/19. The following entries were made into their capital accounts during 2019. Required: If partnership profits for the year equaled P66,000, indicate the allocations between the partners under the following independent profit-sharing allocation conditions: Interest of 10% is allocated on weighted average capital balance and the remainder is divided equally. A salary of P9,000 will be allocated to Chou; 10% interest on ending capital is allocated to the partners; remainder is divided 60/40 to Alucard and Chou, respectively. Salaries are allocated to Alucard and Chou in the amount of P10,000 and P15,000, respectively and the remainder is allocated in the proportion to weighted average capital balances. A bonus of 10% of partnership profits after bonus is credited to Alucard, a salary of P35,000 is allocated to Chou, a P20,000 salary is allocated to Alucard, 10% interest on weighted capital is allocated, and remainder is…

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Cor-Eng Partnership was formed on January 2, 20X1. Under the partnership agreement, each partner has a 50/50 capital balance with a true up a payment required to equal the initial capital accounts. Partnership net income or loss is allocated 50/50. To form the partnership, Cor originally contributed assets costing $30,000 with a fair value of $60,000 on January 2, 20X1, while Eng contributed $20,000 in cash. Drawings by the partners during 20X1 totaled $3,000 by Cor and $9,000 by Eng. Cor-Eng's 20X1 net income was $25,000. Eng's initial capital balance (after the true up payment) in Cor-Eng is

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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.

Chapter 15, Problem 15.16.5P

To determine

Accounting for the formation of partnership:at the formation of partnership, all the partners contributes agreed value of cash and noncash assets, it is necessary to assign a proper value to the noncash assets and liabilities contributed by partners. The partnership must clearly distinguish between capital contributions and loans made to the partnership by individual partners.

The individual partners must agree to the percentage of equity that each will have in the partnership’s net assets. Generally the capital balance is determined by proportionate share of each partner’s capital contribution.

Revaluation method: under this method of valuation of capital:

Increase the book values of existing net assets to their market values.

Record unrecognized goodwill.

Increase the existing partner’s capital accounts for their respective shares of the increase in the book values of the net assets and the recorded goodwill.

The partnership’s total resulting capital reflects the existing capital balances plus the amount of revaluation plus the new partner’s investment.

To choose:the correct answer to determine initial capital by N.

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Answer 3

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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.

Chapter 15, Problem 15.16.5P

To determine

Accounting for the formation of partnership:at the formation of partnership, all the partners contributes agreed value of cash and noncash assets, it is necessary to assign a proper value to the noncash assets and liabilities contributed by partners. The partnership must clearly distinguish between capital contributions and loans made to the partnership by individual partners.

The individual partners must agree to the percentage of equity that each will have in the partnership’s net assets. Generally the capital balance is determined by proportionate share of each partner’s capital contribution.

Revaluation method: under this method of valuation of capital:

Increase the book values of existing net assets to their market values.

Record unrecognized goodwill.

Increase the existing partner’s capital accounts for their respective shares of the increase in the book values of the net assets and the recorded goodwill.

The partnership’s total resulting capital reflects the existing capital balances plus the amount of revaluation plus the new partner’s investment.

To choose:the correct answer to determine initial capital by N.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

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.

Chapter 15, Problem 15.16.5P

To determine