The Partnership of Gilligan, Skipper, and Ginger Had Total Capital

question 13

Multiple Choice

The partnership of Gilligan, Skipper, and Ginger had total capital of $570,000 on December 31, 2014 as follows: $\begin{array}{lr}\text { Gilligan, Capital (30\%) } & \$ 180,000 \\\text { Skipper, Capital (45\%) } & 255,000 \\\text { Ginger, Capital (25\%) } & 135,000 \\\text { Total }&\$570,000\end{array}$ Profit and loss sharing percentages are shown in parentheses.The partnership has no liabilities.If Mary Ann purchases a 25 percent interest from each of the old partners for a total payment of $270,000 directly to the old partners

• A)total partnership net assets can logically be revalued to $1,080,000 on the basis of the price paid by Mary Ann.
• B)the payment of Mary Ann does not constitute a basis for revaluation of partnership net assets because the capital and income interests of the old partnership were not aligned.
• C)total capital of the new partnership should be $760,000.
• D)total capital of the new partnership will be $840,000 assuming no revaluation.

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Definitions:

McClelland's Need

Refers to a theory identifying three primary needs in work situations: the need for achievement, the need for power, and the need for affiliation.

Alderfer's Relatedness Needs

A component of Alderfer's ERG theory focusing on the interpersonal relationships and social needs of individuals within an organization.

Motivation Theory

A set of theories that aim to explain what drives individuals to initiate, direct, and sustain behaviors and actions to achieve specific goals.

Hierarchical

An organizational structure where individuals or entities are ranked according to levels of authority or status, from the highest to the lowest.