b.
A completed table is shown in Step 1.
c.
Conclusion based on the table:
(i)
AC = CC, therefore, there is no asset revaluation.
(ii)
New partner: AC > CC, therefore, he receives the bonus.
(iii)
Old partners: AC < CC, therefore, they give the bonus shared according to
their profit and loss ratio.
Case 4-Positive Asset Revaluation, no Bonus.
Conde invests P100,000 for a 1/5 interest in the
agreed capital of P500,000.
Other Assets
100,000
Calma, Capital
50,000
Castro, Capital
50,000
152

Solution:
Step 1
Fill in the table as in Cases I to 3. The completed table after Steps 1 to 4 is shown
below:
AC
СС
Asset Revaluation
Old
P400,000
P300,000
P100,000
d.
New
P100,000
P100,000
____-____
P500,000
P400,000
P100,000
Step 2
Compare AC and CC. In this case, AC > CC (P500,000 > P400,000).
Therefore, there is a positive asset revaluation.
Step 3
Determine if there is bonus.
a.
Compute for the capital credit of the new partner.
AC x fraction of interest, P500,000 x 1/5 = 100,000.
b.
Write this amount in the AC column of the new partner.
c.
Compare the new partner's AC with his CC. In this case, his AC = CC (P100,000);
therefore, there is no bonus.
Step 4
Complete the table by filling in the missing figures.
a.
AC or capital credit of the old partners.
AC x fraction of interest
P500,000 x 4/5 = P400,000 or
CC+ Asset Revaluation
P300,000
+ P100,000 = P400,000
b.
A completed table is shown in Step 1.
c.
Conclusion based on the table:
(i)
AC > CC, therefore, there is a positive asset revaluation.
(ii)
New partner: AC = CC, therefore, there is no bonus.
(iii)
Old partners: AC > CC, therefore, they are credited for the asset revaluation
shared according to their profit and loss ratio.
Case 5 - Negative Asset Revaluation, No bonus.
Conde invests P60,000 for a 1/5 interest in the
agreed capital of P300,000
Calma, Capital
30,000
Castro, Capital
30,000
Other Assets
60,000
Solution:
Step 1
Fill in the table as in Cases I to 4. The completed table after Steps 1 to 4 is shown
below:
AC
CC
Asset Revaluation
153

Old
P240,000
P300,000
(P60,000)
New
60,000
60,000
____-___
P300,000
P360,000
(P60,000)
Step 2
Compare AC And CC. In this case, AC < CC (P300,000 < P360,000).
Therefore, there is a negative asset revaluation.
Step 3
Determine if there is bonus.
a.
Compute for the capital credit of the new partner.
AC x fraction of interest; P300,000 x 1/5 = P60,000.
b.
Write this amount in the AC column of the new partner.
c.
Compare the new partner's AC with his CC. In this case, his AC = CC (P60,000 =
P60,000); therefore, there is no bonus.
Step 4
Complete the table by filling in the missing figures.
a.
AC or capital credit of the old partners.
AC x fraction of interest
P300,000 x 4/5 = P240,000 or
CC- Asset Revaluation
P300,000 - P60,000 = P240,000
b.
completed table is shown in Step 1.
c.
Conclusion based on the table:
(i)
AC <
CC, therefore, there is a negative asset revaluation.
(ii)
New partner: AC =
CC, therefore, there is no bonus.
(iii)
Old partners: AC < CC, therefore, they are charged for the asset
revaluation shared according to their profit and loss ratio
In the succeeding illustrations, the tables are summarized for easier comparison.
154

AGREED CAPITAL IS NOT GIVEN
There are cases when the contributions and the fraction of interest of the new partner are given,
but the agreed capitalization of the new firm is not specified. When such a situation exists, the
admission of the new partner is recorded using any of these two methods:
1. Bonus method

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- Fall '17
- susan d, cadiente
- Balance Sheet, Generally Accepted Accounting Principles, Uncollectible Accounts, Income Summary