Bellows has a capital balance of $200,000 after adjusting assets to fair market value.
Rodriguez contributes $360,000 to receive a 60% interest in a new partnership with
Bellows. Determine the amount and recipient of the partner bonus.
4.Hiro has a capital balance of $75,000 after adjusting assets to fair market value. Marone
contributes $25,000 to receive a 40% interest in a new partnership with Hiro. Determine
the amount and recipient of the partner bonus.
For the first scenario with Bellows, the total value of the partnership after Rodriguez's contribution is $560,000 ($200,000 from Bellows + $360,000 from Rodriguez).
To determine the partner bonus, you can subtract the initial investment from the total partnership value.
In this case, the partner bonus would be $200,000 (total partnership value) - $360,000 (Rodriguez's contribution) = -$160,000.
The negative value indicates that there is no partner bonus in this scenario.
For the second scenario with Hiro, the total value of the partnership after Marone's contribution is $100,000 ($75,000 from Hiro + $25,000 from Marone).
Again, subtract the initial investment from the total partnership value to determine the partner bonus.
In this case, the partner bonus would be $100,000 (total partnership value) - $25,000 (Marone's contribution) = $75,000.
So the amount of the partner bonus is $75,000, and the recipient of the bonus would be Hiro.