Problem

Recording the withdrawal of a partner. Petersen, one of your clients, has indicated that...

Recording the withdrawal of a partner. Petersen, one of your clients, has indicated that Jacobsen is interested in buying Petersen’s interest in the partnership. Relevant information:

Petersen has asked you a number of questions regarding selling his interest in the partnership. It is important to note that the partners vote on partnership matters in the same proportion as their profit and loss percentages. Prepare a response to each of the following questions:

1. Given the above information, what is the suggested value of Petersen’s interest in the partnership?

2. Petersen believes that there is significant additional value traceable to the partnership that is not reflected in the above information. In particular, Petersen believes that the partnership has significant goodwill and feels that his interest in the partnership is worth $130,000. What amount of total entity goodwill is suggested by this value?

3. If Petersen were to sell half of his interest in the partnership to Jacobsen and half to Olsen, why might the value of the two halves not be the same?

4. If Petersen were to sell one-half of his interest to the partnership for $60,000, what would his new capital balance be after the sale? Assume that all previously recognized net assets are recorded at their market values but that only the goodwill traceable to Petersen’s partial sale of an interest is recognized.

5. What might be some advantages to Petersen and Jacobsen of the partnership acquiring Petersen’s interest rather than selling to an individual?

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search
Solutions For Problems in Chapter 14