Darrow invests $270,000 in cash for a 30 percent ownership interest. The money goes to the original
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Darrow invests $270,000 in cash for a 30 percent ownership interest. The money goes to the original partners. Goodwill is to be recorded. How much goodwill should be recognized, and what is Darrow’s beginning capital balance?
a. $410,000 and $270,000.
b. $140,000 and $270,000.
c. $140,000 and $189,000.
d. $410,000 and $189,000.
Capital account balances:
William (40% of gains and losses) . . . . . . . . . . . . . $220,000
Jennings (40%) . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000
Bryan (20%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...
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Related Book For
Advanced Accounting
ISBN: 9781260247824
14th Edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
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