Question
In: Accounting
You are an accountant at a partnership. The partnership has four partners, and, according to the...
You are an accountant at a partnership. The partnership has four partners, and, according to the partnership agreement, all have an equal stake in the company.
This partnership was approached by a corporation that would like to acquire them by a stock acquisition. The partnership has no authorized stock, and the corporation does not want to pay cash for the partnership.
The partnership is valued at $4,000,000 today.
Reading the partnership agreement, you find that the partnership can be terminated at any time with the consent of the partners. They do not want to dissolve the partnership.
The corporation very much wants to purchase the partnership.
In your expansive knowledge of accounting, what would you suggest the partnership do, as well as the corporation to make this consolidation happen?
The only solution involves consolidating the partnership and the corporation. How would you, the accountant, resolve this issue, including pros and cons for several different methods?
In the end, you have to tell me which solution the company and partnership have agreed.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
33. The ABCD partnership has four partners. Each partner’s adjusted basis in the partnership interest owned...
33. The ABCD partnership has four partners. Each
partner’s adjusted basis in the partnership interest owned by that
partner was $40,000 on the first day of last year. The partnership
reported net income for last year of $80,000 (there were no
separately stated items to take into account). The partnership
distributed pro rata to each partner $55,000 in cash plus identical
parcels of land that each had a fair market value of $25,000 and a
basis to the partnership of...
Partners in the ABCD Partnership decided to dissolve their partnership. On that date, the partners had...
Partners in the ABCD Partnership decided to dissolve their
partnership. On that date, the partners had the following
pre-liquidation capital balances:
Partner A
$28,000
Partner B
41,000
Partner C
18,000
Partner D
12,000
A, B, C, and D share residual profits and losses in a 4:3:2:1
ratio.
Liabilities at the date of dissolution total $100,000, and
noncash assets equal $105,000. During the first month of
liquidation, assets having a book value of $55,000 were sold for
$31,000. During the second...
Define a partnership. b) List four important matters, relevant to the accountant that may be included...
Define a partnership. b) List four important matters, relevant
to the accountant that may be included in the partnership deed.
The partnership agreement of Ahmed and Ali has the following provisions: 1 - Partners are to...
The partnership agreement of Ahmed and Ali has the following
provisions:
1 -
Partners are to earn 10% interest on their average capital
balances
2 -
Ali is to earn a 5% bonus on any net income above 40,000
3 -
Ahmed and Ali are to earn salaries of 25,000 and 20,000
respectively
4 -
Any remaining income or loss is to be divided using a 4:2
ratio
Ahmed's average capital balance is 130,000 and Ali's is 30,000
Net income...
the BDC partnership has 3 partners with the following partnership interest percentages and tax-year ends: B...
the BDC
partnership has 3 partners with the following partnership interest
percentages and tax-year ends: B has a 35 percent ownership and a
dec. 31 year end; D owns 45 percent and has a June 30 year end, and
C owns 35 percent and has a Oct. 30 year end. What method must be
used to determine the partnership year end and which year end is
required?
Imagine that you are forming a partnership with two other partners. All three of you have...
Imagine that you are forming a partnership with two other
partners. All three of you have cash to invest in the business as
well as skills to contribute. Two of your partners will provide
services, along with investing cash.
Are there any details you think should be included in the
partnership agreement? What disadvantages should you be aware of
when forming a partnership?
How will you allocate income or loss? Will you also include a
salary allowance for the partners...
The Ace and Deuce partnership has been created to operate a law firm. The partners are...
The Ace and Deuce partnership has been created to operate a law
firm. The partners are attempting to devise a fair system to
allocate profits and losses. Ace plans to work more billable hours
each year than Deuce. However, Deuce has more experience and can
charge a higher hourly rate. Ace expects to invest more money in
the business than Deuce.
REQUIRED Build a spreadsheet that can be used
to allocate profits and losses to these two partners each year....
The Ace and Deuce partnership has been created to operate a law firm. The partners are...
The Ace and Deuce partnership has been created to
operate a law firm. The partners are attempting to devise a fair
system to allocate profits and losses. Ace plans to work more
billable hours each year than Deuce. However, Deuce has more
experience and can charge a higher hourly rate. Ace expects to
invest more money in the business than Deuce.
Required
Build a spreadsheet that can be used to allocate
profits and losses to these two partners each year....
In each of the problems below, the ABC partnership has three equal partners A, B and...
In each of the problems below, the ABC partnership has three
equal partners A, B and C and the following balance sheet:
Assets
Partners’ Capital
A.B.
F.M.V.
A.B.
F.M.V.
Cash
$60,000
$60,000
A
$30,000 $45,000
Receivables
0
15,000
B
30,000
45,000
Inventory
15,000
30,000
C
30,000 45,000
Goodwill
15,000
30,000
Total
$90,000
135,000
$90,000 $135,000
Problem
A partner A dies on the first day of the current year and in an
agreement arranged...
A, B and C are equal partners in the ABC partnership which has the following balance...
A, B and C are equal partners in the ABC partnership which has
the following balance sheet:
Assets
Partners’ Capital
A.B.
F.M.V.
A.B. F.M.V.
Cash
$6,000
$6,000
A
$12,000 $18,000
A/R
0
9,000
B
12,000 18,000
Inventory
18,000
18,000
C
12,000 18,000
Land & Building
6,000 12,000
Equipment
6,000 9,000
$36,000
$54,000
$36,000 $54,000
The partnership distributes the $9,000 worth of accounts
receivable to A and $18,000 worth of inventory equally ($9,000
each) to B and...
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