Abner and Bimbo have just formed a partnership, Abner contributed cash of $2,346,000 and office equipment that cost $1,170,000. The equipment had been used in the sole proprietorship and had been 80% depreciated. The current fair value of the equipment is $756,000. An unpaid mortgage loan on the equipment of $252,000 will be assumed by the partnership. Abner is to have a 40% interest in the partnership net assets. Bimbo is to contribute only merchandise with a fair value of $1,890,000. Required: Use Bonus and Goodwill Method in computing the capital balances of Abner and Bimbo.
Abner and Bimbo have just formed a partnership, Abner contributed cash of $2,346,000 and office equipment that cost $1,170,000. The equipment had been used in the sole proprietorship and had been 80% depreciated. The current fair value of the equipment is $756,000. An unpaid mortgage loan on the equipment of $252,000 will be assumed by the partnership. Abner is to have a 40% interest in the partnership net assets. Bimbo is to contribute only merchandise with a fair value of $1,890,000. Required: Use Bonus and Goodwill Method in computing the capital balances of Abner and Bimbo.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Abner and Bimbo have just formed a partnership, Abner contributed cash of $2,346,000 and office equipment that cost $1,170,000. The equipment had been used in the sole proprietorship and had been 80% depreciated. The current fair value of the equipment is $756,000. An unpaid mortgage loan on the equipment of $252,000 will be assumed by the partnership. Abner is to have a 40% interest in the partnership net assets. Bimbo is to contribute only merchandise with a fair value of $1,890,000.
Required: Use Bonus and Goodwill Method in computing the capital balances of Abner and Bimbo.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education