Partner retirement entries—Fair value adjustment
A balance sheet at December 31, 2011, for the Beck, Dee, and Lynn partnership is summarized as follows:
|
Assets |
$800,000 |
Liabilities |
$200,000 |
|
Loan to Dee |
100,000 |
Beck capital (50%) |
300,000 |
|
$900,000 |
Dee capital (40%) |
300,000 |
|
|
Lynn capital (10%) |
100,000 |
||
|
$900,000 |
Dee is retiring from the partnership. The partners agree that partnership assets, excluding Dee’s loan, should be adjusted to their fair value of $1,000,000 and that Dee should receive $310,000 for her capital balance net of the $100,000 loan. The bonus approach is used; therefore, no goodwill is recorded.
REQUIRED: Determine the capital balances of Beck and Lynn immediately after Dee’s retirement.