An existing partnership (Jim and Jerry) wants to expand their services to include a rare and specialized service. This service will generate more revenue than other services since it is so specialized and they will be the only one to offer the service in their state. They find an individual (Bob) who has this specialized skill and asks him to become a partner in their partnership. Bob agrees but is requesting a $60,000 interest in the partnership for a $30,000 cash investment. Is this
An existing partnership (Jim and Jerry) wants to expand their services to include a rare and specialized service. This service will generate more revenue than other services since it is so specialized and they will be the only one to offer the service in their state. They find an individual (Bob) who has this specialized skill and asks him to become a partner in their partnership. Bob agrees but is requesting a $60,000 interest in the partnership for a $30,000 cash investment. Is this
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An existing partnership (Jim and Jerry) wants to expand their services to include a rare and specialized service. This service will generate more revenue than other services since it is so specialized and they will be the only one to offer the service in their state. They find an individual (Bob) who has this specialized skill and asks him to become a partner in their partnership. Bob agrees but is requesting a $60,000 interest in the partnership for a $30,000 cash investment. Is this possible? If so how would the accountant go about accounting for the $30,000 difference between the interest Bob will receive and the cash he is investing?
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