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(Solved): O'Toole elects to withdraw from the partnership, leaving Matteson and Richton to operate the busin ...



OToole elects to withdraw from the partnership, leaving Matteson and Richton to operate the business. Following the original

O'Toole elects to withdraw from the partnership, leaving Matteson and Richton to operate the business. Following the original partnership agreement, when a partner withdraws, the partnership and all of its individual assets are to be reassessed to current fair values by an independent appraiser. The withdrawing partner will receive cash or other assets equal to that partner's current capital balance after including an appropriate share of any adjustment indicated by the appraisal. Gains and losses indicated by the appraisal are allocated using the regular profit and loss percentages. An independent appraiser is hired and estimates that the partnership as a whole is worth \( \$ 590,000 \). Regarding the individual assets, the appraiser finds that a building with a book value of \( \$ 280,000 \) has a fair value of \( \$ 420,000 \). The book values for all other identifiable assets and liabilities are the same as their appraised fair values. Accordingly, the partnership agrees to pay O'Toole \( \$ 320,000 \) upon withdrawal. Matteson and Richton, however, do not wish to record any goodwill in connection with the change in ownership. Prepare the journal entry to record O'Toole's withdrawal from the partnership. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations.) Record the building appreciation to old partners. 2 Record O'Toole's withdrawal from the partnership.


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Calculation and allocation of gain on revaluation of building Gain on fair value increase of Building=fair value of building ? book value=$420,000?280
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