Reference no: EM133295
Question :
The partnership of Gilligan, Skipper, and Ginger had net capital of $570,000 on December 31, 2014 as follows:
Gilligan, Capital (30%) $180,000
Skipper, Capital (45%) 255,000
Ginger, Capital (25%) 135,000
Total $570,000
Profit and loss sharing percentages are shown in parentheses. The partnership has no liabilities. If Mary Ann purchases a 25 % interest from each of the old partners for a net payment of $270,000 directly to the old partners
A) Total partnership net assets will logically be revalued to $1,080,000 on the basis of the price paid by Mary Ann.
B) The payment of Mary Ann does not constitute a basis for revaluation of partnership net assets because the capital and income interests of the old partnership were not aligned.
C) Net capital of the new partnership could be $760,000.
D) Total capital of the new partnership will be $840,000 considering no revaluation.