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Homework answers / question archive / In the ABC partnership (to which Daniel seeks admittance), the capital balances of Albers, Bert, and Connell, who share income in the ratio of 5:3:2 are:  Albert $500

In the ABC partnership (to which Daniel seeks admittance), the capital balances of Albers, Bert, and Connell, who share income in the ratio of 5:3:2 are:  Albert $500

Accounting

In the ABC partnership (to which Daniel seeks admittance), the capital balances of Albers, Bert, and Connell, who share income in the ratio of 5:3:2 are: 
Albert $500.000 Bert 300.000 Conned 200.000 
Based on the preceding information, what amount of goodwill will be recorded if Daniel invests 3450,000 for a coe-third interest? A. $0 B. $10,000 C. $ 50,000 D. 1100.000 
 

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Computation of Amount of Goodwill:

Total Capital Balances before Admission = 500,000 + 300,000 + 200,000 = 1,000,000

Daniel will be admitted for one third interest of $450,000

Total capital of partnership = 1,000,000 * 3/2 = 1,500,000

Share if Daniel in partnership = 1,500,000 * 1/3 = 500,000

 

Amount of Goodwill = Share in partnership - Amount invested by Daniel

= 500,000 - 450,000

Amount of Goodwill = $50,000

The correct option is C "$50,000".

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