Addition by purchase – Assessment
1. N, X, and Y are partners sharing profits and losses in the ratio of 4:3:3,
respectively. The condensed balance sheet of NXY Partnership as of
December 31, Year 1 is:
Cash P 50,000 Liabilities P 40,000
Other assets 130,000 N, capital 60,000
X, capital 40,000
Y, capital 40,000
Total P180,000 Total P 180,000
All the partners agree to admit Z as a 1/5 partner in the partnership without any
bonus. Z shall contribute assets amounting to 35,000
Total partnership capital (140,000/
4/5) 175,000
Multiply by 1/5
Assets to be contributed by Z 35,000
Again, if there is no bonus or goodwill to be recognized, total partnership
capital may be computed using the capital accounts of the old partners as
the base, as shown above.
2. In the partnership of A and B with capital balances of 50,000 and
75,000 respectively and C is admitted by buying 1/2 of B’s interest for
36,000.
B, suffered a personal loss of 1,500
3. Partnership is said to be dissolved when a-
any of the above
4. If revaluation is traceable to the previous partners, it is
Allocated among the previous partners according to their original
profit and loss sharing percentages.
5. Presented below is the condensed statement of financial position of
the partnership of Go, Lee and Mao who share profits and losses in the
ratio of 6:3:1 respectively:
Cash 85,000
Other assets 415,000
Total 500,000
Liabilities 80,000
Go, Capital 252,000
Lee, capital 126,000
Mao, capital 42,000
Total 500,000
The partners agree to sell Gaw 20% of their respective capital and profit and
losses interests for a total payment of 90,000. The payment by Gaw is to be
made directly to the individual partners. The partners agree that implied
goodwill is to be recorded prior to the acquisition by Gaw. The capital balance
of Go, Lee and Mao respectively after admission of Gaw are:
216,000 108,000 36,000
First compute the implied goodwill as follows:
P450,
Total implied goodwill (P90, 000 ÷ 20%)
000
Total capital before admission 420, 000
Goodwill to old partners, 6:3:1 P30, 000
The computation of the capital balances of the old partners are as follows:
Go (P252, 000 + 18, (20% x 270, P216,
- =
000) 000) 000
Lee (126, 000 + 9, (20% x 135, 108,
- =
000) 000) 000
Mao (42, 000 + 3, (20% x 45,
- = 36, 000
000) 000)
6. In admission by purchase of interest, the selling partners may sell
their share of partnership’s interest to the incoming partner at –
any of the other choices
7. Ranken purchases 50% of Lark’s capital interest in the K and L
partnership for 22,000. If the capital balances of Kim and Lark are
40,000 and 30,000, respectively. Ranken’s capital balance following
the purchase is
15,000
8. When a new partner deals directly with an existing partner or
partners rather than with the partnership entity, the acquisition price
is paid to the selling partner/s and not to the partnership itself. The
partnership records the redistribution of capital interests by
transferring all or a portion of the seller’s capital to the new partner’s
capital account but does not record the transfer of any asset or
consideration.
9. The following information pertains to ABC Partnership of Amor, Bing,
and Cora:
Amor, capital (20%) P 200,000
Bing, capital (30%) 200,000
Cora, capital (50%) 300,000
On this date, the partners agreed to admit Dolly into the partnership.
Assuming Dolly purchased fifty percent of the partners capital and
pays P500,000 to the old partners, how would this amount be
distributed to them?
130,000 145,000 225,000
Transferred to Dolly
Contributed Agreed P/L Ratio based
Total Cash New
Equity Equity 50% on profit Distribution Ratio
20%
x
Amor 200,000.00 100,000.00 100,000.00 30,000.00 20% 130,000.00 50% 10
30%
x
Bing 200,000.00 100,000.00 100,000.00 45,000.00 30% 145,000.00 50% 15
50%
x
Cora 300,000.00 150,000.00 150,000.00 75,000.00 50% 225,000.00 50% 25
Dolly - 350,000.00 50
700,000.00 700,000.00
Excess
amount 150,000.00
Amor,
Capital 100,000.00
Bing,
Capital 100,000.00
Cora,
Capital 150,000.00
Dolly,
Capital 350,000.00
