Karasuma and Irina are partners who have capitals of P6,000 and P4,800 and who share profits in the ratio of 3:2. Koro is admitted as a partner upon investing cash of P5,000, with profits to be shared equally. Assume that Koro is allowed a 40% interest in the firm. 1. What entries would be made in recording the investment if the asset revaluation method is used? 2. What entries would be made if the bonus method is used? 3. Which method will be preferred by Koro? How much will Koro gain by the use of this method?

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Karasuma and Irina are partners who have capitals of P6,000 and P4,800 and who share profits in the ratio of 3:2. Koro is admitted as a partner upon investing cash of P5,000, with profits to be shared equally.

Assume that Koro is allowed a 40% interest in the firm.

1. What entries would be made in recording the investment if the asset revaluation method is used?

2. What entries would be made if the bonus method is used?

3. Which method will be preferred by Koro? How much will Koro gain by the use of this method?

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