Chapter 15 – Partnerships: Formation, Operation, and Changes in Membership
P15-13 Determining a New Partner’s Investment Cost
a.
$200,000
(No goodwill or bonus recorded)
Cash
200,000
Snider, Capital ($800,000 x 1/4)
200,000
0.75 estimated total resulting capital
$ 600,000
Estimated total resulting capital ($600,000 / 0.75)
$ 800,000
Prior capital
(600,000)
Cash contribution required from Snider
$ 200,000
b.
$210,000
(Goodwill of $30,000 to prior partners)
Goodwill
30,000
Der, Capital ($30,000 x 0.40)
12,000
Egan, Capital ($30,000 x 0.30)
9,000
Oprins, Capital ($30,000 x 0.30)
9,000
Cash
210,000
Snider, Capital ($840,000 x 1/4)
210,000
0.75 estimated total resulting capital
$ 630,000
Estimated total resulting capital ($630,000 / 0.75)
$ 840,000
Prior capital after goodwill recognition
(630,000)
Cash contribution required from Snider
$ 210,000
c.
$232,000
(Bonus of $24,000 to be paid by Snider)
Cash
232,000
Der, Capital ($24,000 x 0.40)
9,600
Egan, Capital ($24,000 x 0.30)
7,200
Oprins, Capital ($24,000 x 0.30)
7,200
Snider, Capital ($832,000 x 1/4)
208,000
0.75 estimated total resulting capital
($600,000 + $24,000 bonus)
$ 624,000
Estimated total resulting capital ($624,000 / 0.75)
$ 832,000
Prior capital before bonus from Snider
(600,000)
Cash contribution required from Snider
$ 232,000
d.
$190,000
(New partner given $10,000 of goodwill)
Cash
190,000
Goodwill
10,000
Snider, Capital ($800,000 x 1/4)
200,000
0.75 estimated total resulting capital
$ 600,000
Estimated total resulting capital ($600,000 / 0.75)
$ 800,000
Prior capital
(600,000)
Capital credit to Snider
$ 200,000
Goodwill to Snider
(10,000)
Cash contribution required from Snider
$ 190,000
