In the ad partnership, allen's capital is $140,000 and daniel's is $40,000 and they share income in a 3: 1 ratio, respectively. they decide to admit david to the partnership. each of the following questions is independent of the others.
refer to the information provided above. david directly purchases a one-fifth interest by paying allen $34,000 and daniel $10,000. the land account is increased before david is admitted. by what amount is the land account increased?
a. $40,000
b. $10,000
c. $36,000
d. $20,000

Option (A) is correct.

Explanation:

Given that,

Allen's capital is $140,000

Daniel's is $40,000

Income sharing Ratio = 3:1

David paid for a 1/5th stake in the partnership

Allen = $34,000 and Daniel = $10,000

Total amount paid by David = $44,000

Land account is increased before David is admitted

Therefore,

The value of entire entity = 5 × $44,000

                                        = $220,000

Upward valuation on account of land revaluation = $220,000 - $180,000

                                                                                    = $40,000

answer: tell me how

explanation: