A partnership has the following capital balances: Comprix (50% of gains and losses) $ 100,000 Heflin...
A partnership has the following capital balances:
| Comprix (50% of gains and losses) | $ | 100,000 |
| Heflin (25%) | 200,000 | |
| Kaplan (25%) | 300,000 | |
Mahar is going to pay a total of $202,500 directly to these three partners to acquire a 25 percent ownership interest from each. Goodwill is to be recorded. What is Heflin’s capital balance after the transaction?
Multiple Choice
-
$150,000
-
$175,000
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$200,000
-
$189,375
Homework Answers
Present capital = 100,000+200,000+300,000 = 600,000
Implied capital = 202,500/25% = 810,000
Goodwill = Implied capital - Present capital
= 810,000 - 600,000 = 210,000
Goodwill allocated to Heflin = 210,000*25% = 52,500
Capital of Heflin after goodwill allocation = 200,000 + 52,500 = 252,500
Heflin capital after the transaction = 252,500 - 25% given up
= $189,375
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