Of the current capital amount, Sidney is purchasing 20%. The question tells you that Sidney is purchasing a proportion of interest from Newton and Sharman, which means the total capital of $444,000 does not change. It doesn't add up to the answer but I may have done it wrong. Goodwill method is not used therefore, use the bonus method.Īnd I believe the problem is saying the remainder contributed by Sidney goes to Newton and Sharman. (1) Other comprehensive income maybe presented in the S of changes in stockholder's equity Assuming that implied goodwill is not to be recorded, what is the combined gain realized by Newton and Sharman upon the sale of a portion of their interests in the partnership to Sidney.Ģ. As a result of this transaction, Sidney acquired a one-fifth interest in the net assets and profits of the firm. On June 1, 2010, Sidney was admitted to the partnership when he purchased, for $132,000, a proportionate interest from Newton and Sharman in the net assets and profits of the partnership. The capital accounts of the partnership of Newton, Sharman, and Jackson on June 1, 2010, are presented below with their respective profit and loss ratios. Topic: weird questions on wiley 2012 ( Topic Closed)ġ.
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