Partnership Accounting

Question 1

Calculating the capital balance when property contributed has a mortgage results in the FV of the Asset being netted against the Liability

Answer 1

Partnership Accounting

Question 2

The bonus method:

Old Partnership Equity+ New Partner Contribution
: New Partnership Equity
x New Partner %
: New Partner Equity AmountNew Partner Contribution - New Partner Equity Amount
: Bonus to Prior Partners using same allocation as P/L

Answer 2

Partnership Accounting

Question 3

Using the goodwill method:

New Contribution / New Equity % : Partnership Value

Implied Value of Partnership - Capital Accounts of all partners
: Goodwill to Old Partners

Under the Goodwill Method - the new Partner is paying an amount for a certain percentage stake in the partnership. For instance if they pay $1000 for a 25% stake - then it is assumed that the Partnership is worth $4 -000 ($1 -000/25%)

Answer 3

Partnership Accounting

Question 4

Fair Value for assets contributed.

Present value of remaining cash flows for liabilities assumed.

Answer 4

Partnership Accounting