Peter, Gordon, Irwin and Mark Are Currently in a Partnership

question 198

Short Answer

Peter, Gordon, Irwin and Mark are currently in a partnership. However, Peter is retiring and will be bought out by the remaining three partners for $150,000. The current ownership structure is as follows:
If Gordon, Irwin and Mark still wish to maintain the same ownership percentage, how should Peter's shares be allocated?

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Definitions:

Dividends

A company's profit-sharing with its investors, generally executed through financial payments.

Net Income

The net income of a company once all costs, taxes, and losses have been deducted.

Partial Equity Method

An accounting technique used when a company has significant influence over another company but does not control it outright, recognizing income to the extent dividends are received.

Net Income

The total earnings of a company after subtracting all expenses and taxes from total revenue.