ASSIGNMENT OF PARTNER'S INTEREST TO THIRD PERSONS

The capital balances of A and B in the partnership is presented as follows:

A, Capital 75,000.00
B, Capital 60,000.00

A assigns 30% of his interest to C, a third person. C paid A P26,000 for the assigned interest.

The partnership records the assignment as follows:

A, Capital 22,500.00
C, Capital 22,500.00

26,000.00
(22,500.00)
3,500.00 not recognized by the partnership

Changes in P/L

60% A
40% B

20% C was admitted

Old Rate New Rate

A 60% 48.00% 1. Original Investment
B 40% 32.00% 2. Beginning Capital Balance
C - 20.00%

Total partnership P/L interest 100%

A
B
C 20%
80%

A (60%)
B (40%)
ADMISSION BY PURCHASE

The capital balances of D and E in the partnership is presented as follows:

P/L
D, Capital 60,000.00 7
E, Capital 40,000.00 3
100,000.00

F is admitted to the new partnership on this date.

CASE 1 - Purchase of interest from 1 partner

F Paid 24,000 directly to D in exchange for a 1/3 interest

D, Capital 20,000.00
F, Capital 20,000.00

CASE 2 - Purchase of interest from ALL partners

ASSUMPTION 1: PURCHASE AT BOOK VALUE

F purchases 1/4 interest in the firm for P25,000.

D, Capital (60,000 x 1/4) 15,000.00

E, Capital (40,000 x 1/4) 10,000.00
F, Capital 25,000.00

D, Capital E, Capital F, Capital Total

Before 60,000.00 40,000.00 100,000.00
Remaining interest 3/4 3/4 3/4
After 45,000.00 30,000.00 25,000.00 100,000.00

OLD NEW
D 70% 52.50% 3/4
E 30% 22.50% 3/4
F 0% 25% 1/4
100% 100%

ASSUMPTION 2: PURCHASE AT LESS THAN THE BOOK VALUE

F purchases 1/4 of D and E's interest for P22,000
F will have a new profit/loss sharing ratio of 25%

Book Value Approach

D, Capital (60,000 x 25%) 15,000.00

E, Capital (40,000 x 25%) 10,000.00
F, Capital 25,000.00

Purchase Price 22,000.00

BV of Interest 25,000.00
Total Loss (3,000.00)

D's Loss (7/10) (2,100.00) personal

E's Loss (3/10) (900.00) loss
 Revaluation Approach

Amount paid 22,000.00

BV of interest 25,000.00
Deficiency (3,000.00)

Total revaluation downward (12,000.00)

1. Revalue first
2. Distribute

D E
Before Adj 60,000.00 40,000.00
Revaluation (8,400.00) (3,600.00)
After adj 51,600.00 36,400.00

D, Capital 8,400.00
E, Capital 3,600.00
Assets 12,000.00

D, Capital 12,900.00
E, Capital 9,100.00
F, Capital 22,000.00

D, Capital E, Capital F, Capital

Before 60,000.00 40,000.00
P/L RATIO Revaluation (8,400.00) (3,600.00)
Revalued capi 51,600.00 36,400.00
INTEREST OF NEW PARTNER Admission (12,900.00) (9,100.00) 22,000.00
After 38,700.00 27,300.00 22,000.00

P/L ratio OLD NEW

D 70% 52.50%
E 30% 22.50%
F 25.00%
100% 100%

ASSUMPTION 3: PURCHASE AT MORE THAN THE BOOK VALUE

F purchases
1/4 of D's interest for P18,000
1/4 of E's interest for P12,000

F will have a new profit/loss sharing ratio of 25%

Book Value Approach

TCC TAC
D 60,000.00 45,000.00 15,000.00
E 40,000.00 30,000.00 10,000.00
100,000.00 75,000.00 25,000.00
 F - 25,000.00 (25,000.00)
100,000.00 100,000.00 -

D 15,000.00 18,000.00 (3,000.00)

E 10,000.00 12,000.00 (2,000.00)
25,000.00 30,000.00 (5,000.00)

Revaluation Approach

Amount paid (F) 30,000.00 120,000.00 TAC

BV of 25% 25,000.00 100,000.00 TCC
Excess 5,000.00
Goodwill 20,000.00 20,000.00

D, Capital E, Capital F, Capital Total

Before 60,000.00 40,000.00 100,000.00
Revaluation/Goodwill 14,000.00 6,000.00 20,000.00
Revalued Capital 74,000.00 46,000.00 120,000.00
Admission (18,500.00) (11,500.00) 30,000.00 -
After 55,500.00 34,500.00 30,000.00 120,000.00

TCC TAC ADJ

D 60,000.00 55,500.00 4,500.00
E 40,000.00 34,500.00 5,500.00
TOTAL 100,000.00 90,000.00 10,000.00
F - 30,000.00 (30,000.00)
100,000.00 120,000.00 (20,000.00)
a 1/3 interest

75%
75%
 88,000.00 TAC
100,000.00 TCC
(12,000.00)

(12,000.00)

Total
100,000.00
(12,000.00)
88,000.00

Total
100,000.00 88,000.00
(12,000.00) 22,000.00
88,000.00
-
88,000.00

D 51,600.00 12,900.00
E 36,400.00 9,100.00
22,000.00
Case 1: No Bonus or No Revaluation. J invests P10,000 for a ¼ interest in the firm. The total firm capital is to be P40,000

TCC TAC ADJ

6G 20,000.00 20,000.00
4H 10,000.00 10,000.00
30,000.00 30,000.00 -
J 10,000.00 10,000.00 -
Total 40,000.00 40,000.00 -

Case 2: Bonus to New Partner. J invests P10,000 for a 35% interest in the firm. The total agreed capital after admission

TCC TAC ADJ

6G 20,000.00 17,600.00 2,400.00
4H 10,000.00 8,400.00 1,600.00
30,000.00 26,000.00 4,000.00
J 10,000.00 14,000.00 (4,000.00)
Total 40,000.00 40,000.00 -

Case 3: Revaluation (Goodwill) to New Partner. J invests P10,000 for a 1/3 interest in the firm and is allowed a credit of

TCC TAC J's investment

G 20,000.00 20,000.00 Contributed capital
H 10,000.00 10,000.00 Agreed capital
Total 30,000.00 30,000.00 - Goodwill/Revaluation
J 10,000.00 15,000.00 (5,000.00)
40,000.00 45,000.00 (5,000.00)

Cash
Goodwill/Asset
J,Capital

Case 4: Bonus to Old Partners. J conveyed a tangible asset with a fair value of P25,000 with an assumed mortgage of P
with bonus to be recognized, keeping in mind that J would be acquiring a 1/4 interest in profits. Before the admission of J, G
a fair value of P7,000.

TAC = TCC TCC TAC ADJ

6 G 20,000.00 23,000.00 (3,000.00)
4 H 10,000.00 12,000.00 (2,000.00)
30,000.00 35,000.00 (5,000.00)
 J 20,000.00 15,000.00 5,000.00
50,000.00 50,000.00 -

Tangible Assets 25,000.00

Mortgage payable 5,000.00
J, Capital 15,000.00
G, Capital 3,000.00
H, Capital 2,000.00
to record the admission of J

OLD
G 60% 45% (100%-25%*60%)
H 40% 30% (100%-25%*40%)
J 25%
100% 100%

Case 5: Revaluation (Goodwill) to Old Partners. J must invest or contribute cash of P24,000 equivalent to 37.50% inter
P64,000. Included in the noncash assets is an equipment undervalued by P7,000.

TCC TAC
6 G 24,200.00 26,000.00 (1,800.00)
4 H 12,800.00 14,000.00 (1,200.00)
37,000.00 40,000.00 (3,000.00)
J 24,000.00 24,000.00 -
61,000.00 64,000.00 (3,000.00)

Equipment 7,000.00
G, Capital 4,200.00
H, Capital 2,800.00
to record asset revaluation

Cash 24,000.00
Assets 3,000.00
J, Capital 24,000.00
G, Capital 1,800.00
H, Capital 1,200.00
to record J's admission
Case 6: Bonus and Revaluation (Goodwill) to New Partner. J invests P10,000 for a 45% interest in the firm. The total a
admission is P50,000.
TCC TAC
G 20,000.00 18,500.00 1,500.00
H 10,000.00 9,000.00 1,000.00
30,000.00 27,500.00 2,500.00
J 10,000.00 22,500.00 (12,500.00)
40,000.00 50,000.00 (10,000.00)

Cash 10,000.00
Goodwill/Asse 10,000.00
G, Capital 1,500.00
H, Capital 1,000.00
J, Capital 22,500.00
to record J's admission

Case 7: Bonus and Revaluation to Old Partners. J invests P15,000 for a 20% interest in the firm. The total agreed capit

TCC TAC
G 20,000.00 30,800.00 (10,800.00)
H 10,000.00 17,200.00 (7,200.00)
30,000.00 48,000.00 (18,000.00)
J 15,000.00 12,000.00 3,000.00
45,000.00 60,000.00 (15,000.00)

Cash 15,000.00
Asset/GW 15,000.00
J, Capital 12,000.00
G, Capital 10,800.00
H, Capital 7,200.00
to record the admission of J

Case 8: Revaluation (Goodwill) to New and Old Partners. J invests P15,000 for a 30% interest in the firm. The total agr
admission is P60,000.

TCC TAC
G 20,000.00 27,200.00 (7,200.00)
H 10,000.00 14,800.00 (4,800.00)
30,000.00 42,000.00 (12,000.00)
J 15,000.00 18,000.00 (3,000.00)
45,000.00 60,000.00 (15,000.00)

Cash 15,000.00
GW 15,000.00
J, Capital 18,000.00
G, Capital 7,200.00
H, Capital 4,800.00
to record J's admission

Case 9: Bonus to Old Partners with Bonus Amount Given. J invests P20,000 in the firm. P5,000 is considered a bonus
The book values of partnership assets and liabilities are equal to fair values, except for a machinery with a book value of P3
P7,000
Case 9: Bonus to Old Partners with Bonus Amount Given. J invests P20,000 in the firm. P5,000 is considered a bonus
The book values of partnership assets and liabilities are equal to fair values, except for a machinery with a book value of P3
P7,000

TCC TAC J's investment

G 20,000.00 23,000.00 (3,000.00) Contributed capital
H 10,000.00 12,000.00 (2,000.00) Agreed capital
30,000.00 35,000.00 (5,000.00) Bonus to G and H
J 20,000.00 15,000.00 5,000.00
50,000.00 50,000.00 -

Cash 20,000.00
J, Capital 15,000.00
G, Capital 3,000.00
H, Capital 2,000.00
to record the admission of J

Case 10: Bonus to New Partner with an Indication of Bonus. J invests P6,000 for a 30% interest in the firm. G and H tr
capitals to that of J as a bonus. An equipment used in the business with a book value of P5,000 and a fair value of P3,000.

TCC TAC
G 18,800.00 16,280.00 2,520.00
H 9,200.00 7,520.00 1,680.00
28,000.00 23,800.00 4,200.00
J 6,000.00 10,200.00 (4,200.00)
34,000.00 34,000.00 -

J's investment
Contributed capital 6,000.00
Agreed capital (34k x 30%) 10,200.00
Bonus to J (4,200.00)

Cash 6,000.00
G, Capital 2,520.00
H, Capital 1,680.00
J, Capital 10,200.00
to record the admission of J

Case 11: Revaluation (Goodwill) to Old Partners with an Indication of a Revaluation (Goodwill). J invests P15,000 fo
interest in the firm. GH Partnership’s had other assets with a book value of P5,500 and a fair value of P10,500. Revaluation
approach is recorded on the firm books prior to J’s admission.

TCC TAC
G 23,000.00 29,000.00 (6,000.00)
H 12,000.00 16,000.00 (4,000.00)
35,000.00 45,000.00 (10,000.00)
J 15,000.00 15,000.00 -
50,000.00 60,000.00 (10,000.00)

Cash 15,000.00
Goodwill 10,000.00
J, Capital 15,000.00
G, Capital 6,000.00
 H, Capital 4,000.00
to record the admission of J

Case 12: Revaluation (Goodwill) to New Partner with Revaluation Amount Given. J invests P20,000 in the firm and is
credit of P6,000 for revaluation (goodwill).

TCC TAC
G 20,000.00 20,000.00
H 10,000.00 10,000.00
30,000.00 30,000.00 -
J 20,000.00 26,000.00 (6,000.00)
50,000.00 56,000.00 (6,000.00)

Cash 20,000.00
Goodwill 6,000.00
J, Capital 26,000.00
to record the admission of J

Case 13: Withdrawals Instead of Revaluation. J invests P20,000 for a 50% interest in the firm. The total firm capital is to
and partners agreed that their capital balances should made equal to their new profit and loss ratio.

TCC TAC
G 20,000.00 12,000.00 8,000.00
H 10,000.00 8,000.00 2,000.00
30,000.00 20,000.00 10,000.00
J 20,000.00 20,000.00 -
50,000.00 40,000.00 10,000.00

OLD NEW
G 60% 30% 40,000.00 p
H 40% 20% 40,000.00 p
J 50%
100% 100%

Cash 10,000.00
G, Capital 8,000.00
H, Capital 2,000.00
J, Capital 20,000.00
Case 14: Bonus and Revaluation (Goodwill) When Not Specifically Stated. An agreement may indicate that an incomin
to receive an interest that is greater or smaller than that which would be recognized if the partner were simply to receive cre
amount invested. Such an agreement, however, may fail to point out whether or not the required interest is to be accomplis
recognition of bonus or revaluation (goodwill).

Assumption 1: Revaluation (Goodwill) or Bonus to New Partner. J invests P15,000 for a 40% capital interest and a 25% in
Since there was no specification as to what approach is to be used, the following alternatives are presented:

Alternative 1: Bonus Approach.

TCC TAC ADJ

G 20,000.00 18,200.00 1,800.00
H 10,000.00 8,800.00 1,200.00
30,000.00 27,000.00 3,000.00
J 15,000.00 18,000.00 (3,000.00)
45,000.00 45,000.00 -

Cash 15,000.00
G, Capital 1,800.00
H, Capital 1,200.00
J, Capital 18,000.00
to record the admission of J

Alternative 2: Revaluation (Goodwill) Approach

TCC TAC ADJ

G 20,000.00 20,000.00
H 10,000.00 10,000.00
30,000.00 30,000.00
J 15,000.00 20,000.00 (5,000.00)
45,000.00 50,000.00 (5,000.00)

Cash 15,000.00
Goodwill/Asse 5,000.00
J, Capital 20,000.00
to record the admission of J

Assumption 2: Revaluation (Goodwill) or Bonus to Old Partners. J invests P15,000 for a 30% capital interest and a 40% in

Alternative 1: Bonus Approach.

TCC TAC ADJ

G 20,000.00 20,900.00 (900.00)
H 10,000.00 10,600.00 (600.00)
30,000.00 31,500.00 (1,500.00)
J 15,000.00 13,500.00 1,500.00
45,000.00 45,000.00

Cash 15,000.00
J, Capital 13,500.00
G, Capital 900.00
H, Capital 600.00
to record the admission of J
Alternative 2: Revaluation (Goodwill) Approach.

TCC TAC ADJ

G 20,000.00 23,000.00 (3,000.00)
H 10,000.00 12,000.00 (2,000.00)
30,000.00 35,000.00 (5,000.00)
J 15,000.00 15,000.00 -
45,000.00 50,000.00 (5,000.00)

Cash 15,000.00
Assets/GW 5,000.00
J, Capital 15,000.00
G, Capital 3,000.00
H, Capital 2,000.00
to record the admission of J
total firm capital is to be P40,000.

Cash 10,000.00
J, Capital 10,000.00

al agreed capital after admission is P40,000.

J's Contributed Capital 10,000.00

J's Agreed Capital 14,000.00
Bonus to J (4,000.00)

he firm and is allowed a credit of P15,000 for his capital.

ontributed capital 10,000.00

greed capital 15,000.00
oodwill/Revaluation (5,000.00)

10,000.00
5,000.00
15,000.00

0 with an assumed mortgage of P5,000 in exchange for a 30% interest in capital

ofits. Before the admission of J, GH Partnership had an equipment of P4,000 with

J's investment
Contributed capital 20,000.00
Agreed capital (50k x 30%) 15,000.00
Bonus to G & H 5,000.00
%-25%*60%)
%-25%*40%)

4,000 equivalent to 37.50% interest in a total agreed capital of

 % interest in the firm. The total agreed capital after

J investment
Contributed capital 10,000.00
Agreed capital 22,500.00
Total (12,500.00)
Revaluation/Goodwill 10,000.00
Bonus to J (2,500.00)

n the firm. The total agreed capital after admission is P60,000.

J's investment
Contributed Capital 15,000.00
Agreed Capital 12,000.00
Bonus to the Old Partners 3,000.00
Revaluation 15,000.00
Total (Bonus + Goodwill) 18,000.00

interest in the firm. The total agreed capital after

J's investment
Contributed capital 15,000.00
Agreed capital 18,000.00
Revaluation/Goodwill of J (3,000.00)
Revaluation/Goodwill 15,000.00
Revaluation to Old partners 12,000.00

m. P5,000 is considered a bonus to Partners G and H.

machinery with a book value of P3,000 and a fair value of
 m. P5,000 is considered a bonus to Partners G and H.
machinery with a book value of P3,000 and a fair value of

ontributed capital 20,000.00

greed capital 15,000.00
onus to G and H 5,000.00

% interest in the firm. G and H transfer part of their

5,000 and a fair value of P3,000.

Equipment
Book value 5,000.00
Fair value 3,000.00
Overstatement 2,000.00

G (60%) 1,200.00
H (40%) 800.00
2,000.00

G, Capital 20,000.00 (1,200.00) 18,800.00

H, Capital 10,000.00 (800.00) 9,200.00

G, Capital 1,200.00
H, Capital 800.00
Equipment 2,000.00
to record the reduction in value of the equipment

Goodwill). J invests P15,000 for a ¼

air value of P10,500. Revaluation (goodwill)

Other assets
BV 5,500.00
FV 10,500.00
Understament (5,000.00)

G (6) (3,000.00)
H (4) (2,000.00)
(5,000.00)

Adjusted balances
G, Capital 23,000.00
H, Capital 12,000.00
 Other assets 5,000.00
G, Capital 3,000.00
H, Capital 2,000.00
to record understatement of assets

nvests P20,000 in the firm and is allowed a

J's investment
Contributed capital 20,000.00
Agreed capital 26,000.00
Revaluation/Goodwill to J (6,000.00)

he firm. The total firm capital is to be P40,000

oss ratio.

TAC 40,000.00
J, Capital (AC) 20,000.00
Agreed capital of G and H 20,000.00 p
G (20k x 60%) 12,000.00
H (20k x 40%) 8,000.00 20,000.00 p

G, Capital (unadjusted) 20,000.00

G, Capital (agreed) (12,000.00)
Withdrawal of G 8,000.00

H, Capital (unadjusted) 10,000.00

H, Capital (agreed) (8,000.00)
Withdrawal of H 2,000.00

G, Capital 8,000.00
H, Capital 2,000.00
Cash 10,000.00

Cash 20,000.00
J, Capital 20,000.00
 ent may indicate that an incoming partner is
artner were simply to receive credit for the
quired interest is to be accomplished through

40% capital interest and a 25% interest in profits.

es are presented:

J's investment
Contributed capital 15,000.00
Agreed capital 18,000.00
Bonus to J or new partner (3,000.00)

J's investment
Contributed capital 15,000.00
Agreed capital 20,000.00
Goodwill to J (5,000.00)

30% capital interest and a 40% interest in profits.

J's investment
Contributed capital 15,000.00
Agreed capital 13,500.00
Bonus to old partners 1,500.00
J's investment
Contributed capital 15,000.00
Agreed capital 15,000.00
Difference -
 #1 Income summary 20,000.00
K, Capital 6,000.00
L, Capital 10,000.00
M, Capital 4,000.00
to record the distribution of profit

#2 K, Capital 5,000.00
Loan Receivable, K 5,000.00
to close loan receivable of K

Beginning Capital, K 30,000.00

+: P/L 6,000.00
Adjusted Capital, K 36,000.00
+/-: Loans (5,000.00)
TOTAL INTEREST OF K 31,000.00

CASE 1 - PAYMENT AT BV. The partnership paid K, P31,000.

K, Capital 31,000.00
Cash 31,000.00
to record the retirement of K

CASE 2 - PAYMENT AT MORE THAN BV. The partnership paid K, P35,000. Included in the noncash assets is an inv
of P10,000. The remaining partners continue to use their old P/L ratio.

Assumption 1: Bonus to Retiring Partner - The excess is bonus chargeable to L and M.

Settlement price 35,000.00

Total interest of K 31,000.00 K, Capital
Bonus to K 4,000.00 L, Capital
M, Capital
L, Capital (5/7) 2,857.14 Cash
M, Capital (2/7) 1,142.86 to record the retirement of K

With specific partnership agreement to record the adjustment of the fair value of inventory.
 BV - Inventory 6,000.00 Settlement price
FV - Inventory 10,000.00 Total interest of K
Gain on revaluation 4,000.00 Bonus to K

Inventory 4,000.00 K, Capital

K, Capital 1,200.00 L, Capital (5/7 x 2,800)
L, Capital 2,000.00 M, Capital (2/7 x 2,800)
M, Capital 800.00 Cash
to record the increase in the FV of inventories to record the retireme

Assumption 2: Partial Revaluation (Goodwill) to Retiring Partner. The excess is considered as a revaluation to be r

BV - Inventory 6,000.00
FV - Inventory 10,000.00
Gain on revaluation 4,000.00

Inventory 4,000.00 K, Capital

K, Capital 1,200.00 Asset/GW
L, Capital 2,000.00 Cash
M, Capital 800.00
to record the increase in the FV of inventories

L, Capital - beg 40,000.00 M, Capital - beg 15,000.00

Profit 10,000.00 Profit 4,000.00
FV adj of Invty 2,000.00 FV adj of Invty 800.00
L, Capital - end 52,000.00 M, Capital - end 19,800.00

Assumption 3: Total Revaluation (Goodwill) to Retiring Partner. The excess is considered as a revaluation to be rec

BV - Inventory 6,000.00 Settlement price

FV - Inventory 10,000.00 Total interest of K
Gain on revaluation 4,000.00 Goodwill to K
Total goodwill
Inventory 4,000.00 Goodwill to L and M
K, Capital 1,200.00
L, Capital 2,000.00
M, Capital 800.00
to record the increase in the FV of inventories

Asset 9,333.33
K, Capital 2,800.00
L, Capital 4,666.67
M, Capital 1,866.67
to record the total revaluation

K, Capital 35,000.00
Cash 35,000.00
to record the retirement of K

L, Capital - beg 40,000.00 M, Capital - beg 15,000.00

Profit 10,000.00 Profit 4,000.00
 FV adj of Invty 2,000.00 FV adj of Invty 800.00
Revaluation 4,666.67 Revaluation 1,866.67
L, Capital - end 56,666.67 M, Capital - end 21,666.67

CASE 3 - PAYMENT AT LESS THAN BV. The partnership paid K, P26,000.

Excess
1. Bonus to the old/remaining partners
2. Revaluation

Assumption 1 - Bonus to remaining partners. The excess is chargeable to L and M.

Cash settlement 26,000.00 K, Capital 31,000.00

Total Interest 31,000.00 Cash 26,000.00
Bonus to L and M 5,000.00 L, Capital 3,571.43
M, Capital 1,428.57
to record K's retirement
L, Capital (5/7) 3,571.43
M, Capital (2/7) 1,428.57

Assumption 2 - Partial Revaluation/Write-down of specific assets

K, Capital 31,000.00 Cash settlement

Asset 5,000.00 K's interest
Cash 26,000.00

L, Capital - beg 40,000.00 M, Capital - beg 15,000.00

Profit 10,000.00 Profit 4,000.00
Revaluation - Revaluation -
L, Capital - end 50,000.00 M, Capital - end 19,000.00

Assumption 3 - Total Revaluation/Write-down. This applies to the total assets of the partnership.

Cash settlement 26,000.00

Total interest of K 31,000.00
Write-down to K (5,000.00) 30%
Total write-down (16,666.67)
Write-down to L and M (11,666.67)

L, Capital (8,333.33)
M, Capital (3,333.33)

K, Capital 5,000.00
L, Capital 8,333.33
M, Capital 3,333.33
Assets 16,666.67
to record asset write-down

K, Capital 26,000.00
 Cash 26,000.00
to record the retirement of K

L, Capital - beg 40,000.00 M, Capital - beg 15,000.00

Profit 10,000.00 Profit 4,000.00
Revaluation (8,333.33) Revaluation (3,333.33)
L, Capital - end 41,666.67 M, Capital - end 15,666.67
oncash assets is an inventory costing P6,000 with a fair value

31,000.00
2,857.14
1,142.86
35,000.00
the retirement of K
Settlement price 35,000.00
Total interest of K 32,200.00
2,800.00

32,200.00
L, Capital (5/7 x 2,800) 2,000.00
M, Capital (2/7 x 2,800) 800.00
35,000.00
to record the retirement of K

as a revaluation to be recognized.

32,200.00
2,800.00
35,000.00

s a revaluation to be recognized.

Settlement price 35,000.00

Total interest of K 32,200.00
Goodwill to K 2,800.00 30%
Total goodwill 9,333.33
Goodwill to L and M 6,533.33
Cash settlement 26,000.00
31,000.00
(5,000.00)