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  • Partnership Dissolution - Revaluation

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    Athena Ashley Gepte Aquino
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    C purchases 20% of the capital interests of partners A and B in a partnership for $100,000. The partnership's equipment had a carrying amount of $340,000 but a fair value of $390,000, resulting in a $50,000 revaluation gain. This revaluation increased A's capital by $20,000 and B's capital by $30,000. After admitting C, A's new capital balance is $120,000, B's is $200,000, and C's is $80,000, with the total capital remaining $400,000.

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    Partnership dissolution.Revaluation

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    C purchases 20% of the capital interests of partners A and B in a partnership for $100,000. The partnership's equipment had a carrying amount of $340,000 but a fair value of $390,000, resulting in a $50,000 revaluation gain. This revaluation increased A's capital by $20,000 and B's capital by $30,000. After admitting C, A's new capital balance is $120,000, B's is $200,000, and C's is $80,000, with the total capital remaining $400,000.

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    7 views1 page

    Partnership Dissolution - Revaluation

    Uploaded by

    Athena Ashley Gepte Aquino
    C purchases 20% of the capital interests of partners A and B in a partnership for $100,000. The partnership's equipment had a carrying amount of $340,000 but a fair value of $390,000, resulting in a $50,000 revaluation gain. This revaluation increased A's capital by $20,000 and B's capital by $30,000. After admitting C, A's new capital balance is $120,000, B's is $200,000, and C's is $80,000, with the total capital remaining $400,000.

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    © All Rights Reserved
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    of 1

    C purchases 20% of A's and B's capital interest for P100,000.

    The carrying amounts and fair values of the partnership's net identifiable assets immediately before C's
    admission are as follows:

    Carrying amount Fair value Increase/Decrease


    Cash 20,000.00 20,000.00 -
    Equipment 340,000.00 390,000.00 50,000.00
    Accounts payable 10,000.00 10,000.00
    A, capital (40%) 130,000.00
    B, capital (60%) 220,000.00

    Requirements:
    Provide the journal entries
    Compute for the partners' capital balances after C's admission.

    Equipment 50,000.00
    A, capital (50,000*40%) 20,000.00
    B, capital (50,000*60%) 30,000.00

    Adjusted capital balances of the existing partners before C's admission.


    A B Totals
    Unadjusted capital 130,000.00 220,000.00 350,000.00
    Share in revaluation 20,000.00 30,000.00 50,000.00
    Adjusted capital 150,000.00 250,000.00 400,000.00

    A, capital (150,000*.20) 30,000.00


    B, capital (250,000 *.20) 50,000.00
    C, capital 80,000.00

    Adjusted capital balances of the existing partners after C's admission.


    A B C Totals
    Adjusted capital before admission 150,000.00 250,000.00 400,000.00
    Sale of interest to C - 30,000.00 - 50,000.00 80,000.00 -
    Capital after C's admission 120,000.00 200,000.00 80,000.00 400,000.00

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