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    Partnership Formation

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    Jules Aguilar
    Claire, Dolly, and Ellery formed a partnership and each contributed assets at book value. Claire contributed cash, accounts receivable, and property, plant, and equipment. Dolly contributed cash and property, plant, and equipment. Ellery contributed cash and accounts receivable. The partnership assumed mortgages on Claire and Dolly's property. After adjustments to fair value, the partners agreed to share interests in a 4:3:3 ratio. The partnership used the goodwill method to allocate capital balances, resulting in goodwill amounts to Dolly and Ellery.

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    Partnership Formation

    Uploaded by

    Jules Aguilar
    130 views3 pages
    Claire, Dolly, and Ellery formed a partnership and each contributed assets at book value. Claire contributed cash, accounts receivable, and property, plant, and equipment. Dolly contributed cash and property, plant, and equipment. Ellery contributed cash and accounts receivable. The partnership assumed mortgages on Claire and Dolly's property. After adjustments to fair value, the partners agreed to share interests in a 4:3:3 ratio. The partnership used the goodwill method to allocate capital balances, resulting in goodwill amounts to Dolly and Ellery.

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    Claire, Dolly, and Ellery formed a partnership and each contributed assets at book value. Claire contributed cash, accounts receivable, and property, plant, and equipment. Dolly contributed cash and property, plant, and equipment. Ellery contributed cash and accounts receivable. The partnership assumed mortgages on Claire and Dolly's property. After adjustments to fair value, the partners agreed to share interests in a 4:3:3 ratio. The partnership used the goodwill method to allocate capital balances, resulting in goodwill amounts to Dolly and Ellery.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    130 views3 pages

    Partnership Formation

    Uploaded by

    Jules Aguilar
    Claire, Dolly, and Ellery formed a partnership and each contributed assets at book value. Claire contributed cash, accounts receivable, and property, plant, and equipment. Dolly contributed cash and property, plant, and equipment. Ellery contributed cash and accounts receivable. The partnership assumed mortgages on Claire and Dolly's property. After adjustments to fair value, the partners agreed to share interests in a 4:3:3 ratio. The partnership used the goodwill method to allocate capital balances, resulting in goodwill amounts to Dolly and Ellery.

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    of 3

    JULES AGUILAR

    Claire, Dolly and Ellery formed the CDE Partnership on September 1, 2016, with the following assets, measured
    at book values in their respective records, contributed by each partner:

    CLAIRE DOLLY ELLERY


    Cash 486,000 460,107 231,903
    Accounts Receivable 109,620 - 141,000
    Property, Plant and Equipment  2,094,390 450,000 -

    PPE of Claire and Dolly are mortgaged with the bank for P1, 458, 000 and P108, 000, respectively. The
    partnership is to assume responsibility for these PPE mortgages. The fair value of the accounts receivable
    contributed by Ellery is P137, 000 while the PPE contributed by Dolly at this date is P510, 300. The partners have
    agreed to share interests on a 4:3:3 ratio, to Claire, Dolly and Ellery, respectively.

    Book of Claire

    Accounts Book Values Adjustments Adjusted Balances


    Cash 486,000 486,000
    Accounts Receivables 109,620 109,620
    PPE 2,094,390 2,094,390
    Mortgage Payable 1,458,000 1,458,000

    Claire Capital 2,690,010 1,458,000 1,232,010


    Total

    Closing Books of Claire

    DR CR
    Mortgage Payable 1,458,000
    Claire Capital 1,232,010
    Cash 486,000
    Accounts Receivables 109,620
    PPE 2,094,390
    Book of Dolly

    Accounts Book Values Adjustments Adjusted Balances


    Cash 460,107 460,107
    Accounts Receivable 0 0
    PPE 450,000 60,300 510,300
    Mortgage Payable 108,000 108,000

    Dolly Capital 910,107 47,000 862,407


    Total

    Closing Books of Dolly

    DR CR
    Mortgage Payable 108,000
    Dolly Capital 862,407
    Cash 460,107
    Accounts Receivables 0
    PPE 510,300

    Book of Ellery

    Accounts Book Values Adjustments Adjusted Balances


    Cash 231,903 231,903
    Accounts Receivable 141,000 4,000 137,000
    PPE 0 0 0
    Mortgage Payable - -

    Ellery Capital 372,903 4,000 368,903


    Total

    Closing Books of Ellery

    DR CR
    Mortgage Payable -
    Dolly Capital 368,903
    Cash 231,903
    Accounts Receivables 137,000
    PPE 0
    Partnership Formation
    Cash 1,178,000
    Accounts Receivable 246,620,
    Property, Plant, Equipment 2,604,690
    Mortgage Payable 1,506,000
    Claire, Capital 1,232,010
    Dolly, Capital 862,407
    Ellery, Capital 368,903

    Goodwill Method

    Contributed Capital Agreed Capital


    Claire 1,232,010 1,232,010
    Dolly 862,407 862,407
    Ellery 368,903 368,903
    Goodwill to Dolly 61,600.50
    Goodwill to Ellery 555,104.50

    Total 2,463,320 3,080,025

    Bonus Method

    Contributed Capital Agreed Capital


    Claire 1,232,010 985,328
    Dolly 862,407 738,996
    Ellery 368,903 368,903
    Bonus to Ellery 370,093

    Total 2,463,320 2,463,320

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