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Parcor-Exercises and Problems

The document contains examples of recording partner retirements and capital increases using different methods. In the first example, Dantes prefers the asset revaluation method over the bonus method when Dee retires because it results in a higher balance in Dantes' capital account. In the second example, asset revaluation is used when Diesta retires and is paid more. Ditas would be indifferent between the bonus method and asset revaluation method when Daria retires as both methods result in the same ending balance in Ditas' capital account.

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Anj Joven
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44 views

Parcor-Exercises and Problems

The document contains examples of recording partner retirements and capital increases using different methods. In the first example, Dantes prefers the asset revaluation method over the bonus method when Dee retires because it results in a higher balance in Dantes' capital account. In the second example, asset revaluation is used when Diesta retires and is paid more. Ditas would be indifferent between the bonus method and asset revaluation method when Daria retires as both methods result in the same ending balance in Ditas' capital account.

Uploaded by

Anj Joven
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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EXERCISE: 5-1

REQUIRED 1: TWO POSSIBLE ENTRIES TO RECORD DEES' RETIREMENT

BONUS METHOD:

DEE, CAPITAL 20,000


DANTES, CAPITAL 3,000
DUNGCA, CAPITAL 2,000
CASH 25,000

DANTES: 5,000 x 3/5= 3,000


DUNGCA: 5,000 x 2/5= 2,000

ASSET REVALUATION METHOD: 5,000 / 1/6= 30,000

DANTES: 30,000 x 3/6= 15,000


DUNGCA: 30,000 x 2/6= 10,000
DEE: 30,000 x 1/6= 5,000

OTHER ASSET 30,000


DEE, CAPITAL 20,000
DANTES, CAPITAL 15,000
DUNGCA, CAPITAL 10,000
CASH 25,000

REQUIRED 2: WHICH METHOD IS TO BE PREFFERED BY DANTES?

ASSET DANTES, CAPITAL


REVALUATION DUNGCA, CAPITAL
BALANCES AFTER RETIREMENT OF DEE
UNDER BONUS METHOD ₱ 47,000.00 ₱ 33,000.00

BALANCES AFTER RETIREMENT OF DEE


UNDER ASSET REVALUATION METHOD 30,000 65,000 40,000
DEPRECIATION ON ASSET REVALUATION (30,000) (15,000) (15,000)
BALANCES AFTER DEPRECIATION - ₱ 50,000.00 ₱ 25,000.00

NET ADVANTAGE/DISADVANTAGE OF
USING THE BONUS METHOD (P 3,000) P 8,000

BASE ON THE ABOVE ANALYSIS, DANTES WILL PREFER THE ASSET REVALUATION METHOD.
EXERCISE: 5-2

REQUIRED 1: DIESTA IS PAID P 90,000 AND NO ASSET REVALUATION IS RECORDED.

BONUS METHOD:

DAYRIT, CAPITAL 7,500


DAYAG, CAPITAL 2,500
DIESTA, CAPITAL 80,000
CASH 90,000

DAYRIT: 10,000x 3/4= 7,500


DAYAG: 10,000 x 1/4= 2,500

REQUIRED 2: DIESTA IS PAID 96,000 AND ASSET REVALUATION IS RECORDED.

BONUS METHOD:

DAYRIT, CAPITAL 12,000


DAYAG, CAPITAL 4,000
DIESTA, CAPITAL 80,000
CASH 96,000

DAYRIT: 16,000 x 3/4= 12,000


DAYAG: 16,000 x 1/4= 4,000

ASSET REVALUATION METHOD: 16,000 / 1/5= 80,000

DAYRIT: 80,000 x 3/5= 48,000


DAYAG: 80,000 x 1/5= 16,000
DIESTA: 80,000 x 1/5= 16,000

OTHER ASSETS 80,000


DIESTA, CAPITAL 80,000
DAYRIT, CAPITAL 48,000
DAYAG, CAPITAL 16,000
CASH 96,000
EXERCISE: 5-3

REQUIRED 1: CAPITAL INCREASES THROUGH ASSET REVALUATION ACCOUNT IS RECORDED.


DITAS DULCE
CAPITAL BALANCES- JAN. 01 35,000 50,000
SHARE IN PROFIT 6,000 6,000
WITHDRAWALS
CAPITAL BALANCES-JULY 01 41,000 56,000

ASSET REVALUATION: 4,000 / 40%= 10,000

DITAS: 10,000 x 30%= 3,000


DULCE: 10,000 x 30%= 3,000
DARIA: 10,000 x 40%= 4,000

JOURNAL ENTRIES: OTHER ASSET 10,000


DARIA, CAPITAL 29,000
DITAS, CAPITAL 3,000
DULCE, CAPITAL 3,000
CASH 33,000

REQUIRED 2: THE ADDITIONAL PAYMENT TO THE RETIREE IS A BONUS FROM THE REMAINING PARTNERS

DITAS, CAPITAL 29,000


DULCE, CAPITAL 2,000
DARIA, CAPITAL 2,000
CASH 33,000

DITAS: 4,000 x 50%= 2,000


DULCE: 4,000 x 50%= 2,000

REQUIRED 3: WHICH OF THE TWO METHODS IS TO BE PREFERRED BY DITAS?

DITAS, CAPITAL
ASSET REVALUATION
BALANCES AFTER RETIREMENT OF DARIA UNDER
BONUS METHOD ₱ 39,000.00

BALANCES AFTER RETIREMENT OF DARIA UNDER


ASSET REVALUATION METHOD 10,000 44,000
DEPRECIATION ON ASSET REVALUATION (10,000) (5,000)
BALANCES AFTER DEPRECIATION - ₱ 39,000.00

DITAS WILL CHOOSE EITHER THE TWO METHOD.


DARIA
25,000
8,000
(4,000)
29,000

DULCE, CAPITAL

₱ 54,000.00

59,000
(5,000)
₱ 54,000.00

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