Question
Liam, Michael and Noah own interests in the LMN Partnership. Their current capital account balances are as follows: Liam $250,000 Michael 300,000 Noah 200,000 Partnership
Liam, Michael and Noah own interests in the LMN Partnership. Their current capital account balances are as follows:
| Liam | $250,000 |
| Michael | 300,000 |
| Noah | 200,000 |
Partnership income is shared in a 3:5:2 ratio. Olivia buys a 20% interest in the partnership by acquiring 20% of each existing partner's interest, paying the three partners a total of $175,000. Partnership identifiable net assets are currently reported at amounts approximating fair value. Using the recognition of implied goodwill approach, implied goodwill is:
| A. | $125,000 | |
| B. | $175,000 | |
| C. | $700,000 | |
| D. | $100,000 |
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The Quality Audit A Management Evaluation Tool
Authors: Charles A. Mills
1st Edition
0070424284, 978-0070424289
