After successfully operating a partnership for several years, the partners have proposed to incorporate the business and

Question:

After successfully operating a for several years, the partners have proposed to incorporate the business and admit another investor. The original partners will purchase at par an amount of preferred stock equal to the book values of their capital interests in the and for the amount of the market value, including unrecognized goodwill, of the business that exceeds book value. The new investor will make an investment at a 5 percent premium over in both preferred and equal to one-third of the total number of shares the original partners purchased. The will acquire all the partnership's assets, assume its liabilities, and employ the original partners and the new investor.

Required
a. Discuss the differences in accounts used and valuations expected in comparing the balance sheets of the proposed and the Discuss the differences that would be expected in a comparison of the income statements of the proposed with that of the Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...