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:

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.
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.
2. Prepare a balance sheet for the Mor, Osc, and Tre partnership on January 2, 2016, after the admission of Tre, assuming that the assets are not revalued.

Transcribed Image Text:

Book Value Fair Value $ 20,000 100,000 50,000 100,000 $270,000 50,000 120,000 100,000 $270,000 Cash Accounts receivable-net Inventories Plant assets-net 20,000 100,000 200,000 120,000 $440,000 50,000 Accounts pavable Mor capital (50%) Osc capital (50%)