Subject: Special Transactions
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Partnership Dissolution
- A 2. A 3.D 4.A 5.C 6.B 7.C 8.B 9. A 10.C 11.C 12.A
ARTNER HIP I L TI N: ADMISSION BY PURCHASE OF INTEREST Problem 1: X and Y are partners sharing prots and losses on a 40:60 ratio and have the following capital balances: P100,000 and P200,000, respectively. 2 directly purchased a 30% interest in the partnership by paying X P40,000 and Y P60,000. CASE 1: Net assets are fairly valued prior to 2'3 admission. 1. What are the capital balances of the partners immediately after Z's admission? X Y Z A. 70,000 140,000 90,000 B. 73,920 1 45,880 1 00,200 0. 64,800 84,800 170,400 D. 75,600 148,400 96,000 CASE 2: Assets are undervalued by P20,000 prior to 2'5 admission. 2. How much is the gain or loss that wnl be recognized in the partnership books upon purchase of interest by Z? A. 0 9. 4,000 gain C. 4.000 loss D. 16,000 gain 3. What are the capital balances of thr partners immediately after Z's admission? X Y Z A. 70,000 140,000 90,000 B. 73,920 145,880 100,200 C. 64,800 84,800 170,400 D. 75,600 148,400 96,000 CASE 3: Assets are overvalued by P30,000 prior to 2'3 admission. 4. How much is the gain or loss that will be recognized in the partnership books upon purchase of interest by Z? A. 0 B. 1,000 gain C. 1,000 loss D. 19,000 gain 5. What are the capital balances of the partners immediately after Z's admission? X Y Z A. 70,000 1 40,000 90,000 B. 78,400 1 52,600 99,000 C. 61 ,600 1 27,400 81 ,000 D. 75,600 148,400 96,000 ADMISSION BY INVESTMENT Problem 1: L, E, and A are partners with capital balances of P787,500, P945000, and P315000, respectively. The partners share prots and losses in the ratio of 45:25:30, respectively. D is to join the partnership upon contributing P315,000 cash plus an equipment with fair value of P630000 to the partnership in exchange for 20% interest in the capital and 25% interest in the prots and losses. After admission, the original partners will share prots and losses equally. 6. 7. 8. 9. How much is bonus to or from .0 assuming (1} the assets and liabilities of the partnership are fairly valued, (2) the existing assets of the original partnership are overvalued by P192500 and {3) the existing assets of the original partnership are undervalued by P180, 000? A. 196,875 bonus from D; (2) 245,000 bonus from D; (3) 382,500 bonus from D B. 346,500 bonus from D; (2) 385,000 bonus from D; (3) 310,500 bonus from D 0. 196,875 bonus to D; (2) 196,875 bonus to D; (3) 382,500 bonus to D D. 346,500 bonus to D; (2) 385,000 bonus to D; (3) 310,500 bonus to D Assuming the assets and liabilities of the partnership are fairly valued, what are the capital balances of the partners alter the admission of D? |_- E A Q A. 787,500 945,000 315,000 945,000 B. 631,575 858,375 21 1,050 598,500 C. 943,425 1,031,625 418,950 598,500 D 903,000 1 ,060,500 430,500 598,500 Assuming the existing assets of the original partnership are overvalued by P1 92, 500, what are the capital balances of the partners alter the admission of D? L E A Q A. 700,875 896,875 257,250 945,000 B. 874,125 993, 1 25 372,750 560,000 C. 811,125 958,125 330,750 700,000 D 851,667 1,009,167 379,167 560,000 Assuming the existing assets of the original partnership are overvalued by P1 80, 000, what are the capital balances of the partners alter the admission of D? |_- E A Q A. 1,008,525 1,067,625 462,150 634,500 B. 878,625 995,625 375,750 562,500 C. 943,425 1,031,625 418,950 598,500 D 874,125 993,125 372,750 560,000 Problem 2: L, E, and A are partners with capital balances of P362,000, P293,000, and P285000, respectively, sharing prots and losses equally. D was admitted as a new partner bringing with him expertise and is to invest cash for a 30% interest in the partnership which includes a credit of P100,000 for bonus upon his admission. 10. How much cash should D contribute? A. 302.85? B. 360,000 C. 260.000 B. 402,857 RETIREMENT The balance sheet as of July 31, 2018 for the partnership of X, Y, and Z show the following information: Total assets (at P450,000 cost) Loan from X 25,000 X, Capital 1 03,000 Y, Capital 1 13,000 2, Capital 204,000 It was agreed among partners that X retires from the partnership and it was further agreed that the assets be adjusted to their fair values of P392.000 as of July 31,2018. The partnership would pay X P100,000 cash plus a noncash asset with a fair value of P12.000 for X's partnership interests. No goodwill is to be recorded. X, Y, and Z share prots and losses: 20%. 20%. and 60%, respectively. 11. How much is the bonus to or from X? A. 15,600 bonus from X B. 15,600 bonus to X C. 9.400 bonus from X D. 9.400 bonus to X 12. What are the capital balances of Y and 2 after X retires from the partnership? A. 103.750; 176.250 B. 99.050; 162.150 0. 105.300; 180.900 D. 97.500: 157.500
