Callie Is Admitted to the Adams & Beal Partnership Under

question 30

Multiple Choice

Callie is admitted to the Adams & Beal Partnership under the goodwill method. Callie contributes cash of $20,000 and non-cash assets with a market value of $30,000 and book value of $15,000 in exchange for a 20% ownership interest in the new partnership. Prior to the admission of Callie, the capital of the existing partnership was $130,000 and an appraisal showed the partnership net assets were fairly stated. Adams & Beal shared profits and losses at a ratio of 80/20, respectively.
Which of the following goodwill amounts would be recorded?

• A)$25,000 to Callie capital
• B)$70,000 to Callie capital
• C)$14,000 decrease to Beal capital
• D)$56,000 increase to Adams capital

---

Definitions:

Input Price

The cost of resources (labor, materials, etc.) used in the production of goods or services.

Complementary

Goods or services that are often used together, such that the increase in consumption of one leads to an increase in the consumption of the other.

Demand for Labor

The total amount of workers that employers are willing and able to hire at a given wage rate within a certain period.

Fastest Growing

Describes entities or economies expanding at a higher rate compared to others within a specified time frame.