A summary balance sheet for the partnership of Quail, Rainne and Selma on December 31, 2011 is shown below.Partners Quail, Rainne and Selma allocate profit and loss in their respective ratios of 6:3:1.
The partners agree to admit Trask for a one-tenth interest.The fair market value for partnership land is $260,000, and the fair market value of the inventory is $370,000.
Required:
1.Record the entry to revalue the partnership assets prior to the admission of Trask.
2.Calculate how much Trask will have to invest to acquire a 10% interest.
3.Assume the partnership assets are not revalued.If Trask paid $300,000 to the partnership in exchange for a 10% interest, what would be the bonus that is allocated to each partner's capital account?
Definitions:
Ethnocentric Attitude
Holding the belief that one's own culture, nation, or ethnicity is superior to others, often leading to bias and prejudice.
Individualistic Culture
A culture that emphasizes the needs and goals of the individual over the needs and goals of the group.
NAFTA Trade Agreement
The North American Free Trade Agreement, a trilateral trade bloc agreement between the United States, Canada, and Mexico designed to eliminate trade barriers.
Low-Context Culture
A culture in which communication is explicit, direct, and relies less on contextual cues or shared understandings.
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