P 16-2 Recording new partner investment—Revaluation and nonrevaluation cases The partnership of Mor and Osc is being dissolved, and the assets and equities at book value and fair value and the profit- and loss-sharing ratios at January 1, 2016, are as follows:

Book Value Fair Value Cash $ 20,000 $ 20,000 Accounts receivable—net 100,000 100,000 Inventories 50,000 200,000 Plant assets—net 100,000 120,000

$270,000 $440,000 Accounts payable $ 50,000 $ 50,000 Mor capital (50%) 120,000 Osc capital (50%) 100,000

$270,000 Mor and Osc agree to admit Tre into the partnership for a one-third interest. Tre invests $95,000 cash and a building to be used in the business with a book value to Tre of $100,000 and a fair value of $120,000.

560 CHAPTER 16 REQuIRED 1. Prepare a balance sheet for the Mor, Osc, and Tre partnership on January 2, 2016, just after the admission of Tre, assuming that the assets are revalued and goodwill is recognized.