The following condensed balance sheet is presented for the partnership of Der, Egan, and Oprins, who share profits and losses in the ratio of 4:3:3, respectively.

Assume that the partnership decides to admit Snider as a new partner with a 25 percent interest.

For each of the following independent cases, determine the amount that Snider must contribute in cash or other assets.
a. No goodwill or bonus is to be recorded.
b. Goodwill of $30,000 is to be recorded and allocated to the original partners.
c. A bonus of $24,000 is to be paid by Snider and allocated to the original partners.
d. The original partners, Der, Egan, and Oprins, agree to give Snider $10,000 of goodwill upon admission to the partnership.
e. Other assets are revalued for an increase of $20,000, and goodwill of $40,000 is recognized and allocated to the original partners at the time of Snider's admission.
f. The partners agree that total resulting capital should be $820,000 and no goodwill should be recognized.
g. Other assets are revalued down by $20,000 and a bonus of $40,000 is paid to Snider at the time ofadmission.

  • CreatedMay 23, 2014
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