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Batman and Robin agree to form a partnership. Batman is to contribute 135,600 cash and equipment...

Batman and Robin agree to form a partnership. Batman is to contribute 135,600 cash and equipment that has a carrying value of 135,000 and a fair value of 115,000. The equipment, however, has a mortgage attached to it and it is agreed by the partners that they will assume it. Robin, on the other hand contributed 240,000 cash. They share profits and losses in the ratio of 4:5. Furthermore, part of their agreement is to bring their initial capital in conformity with their profit and loss ratio. How much is the mortgage of the equipment?

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Answer #1

Profit & Loss Sharing Ratio = 4:5 (Batman : Robin)

Initial Capital should be in 4:5 ratio.

Robin has contributed 240000 for 5/9 th share .

Hence total opening capital of the partnership firm = 240000*9/5 = 432000

Batmans Opening capital should be = Total Capital * share = 432000*4/9 = 192000

Capital= Fairvalue of the assets brought - Liabitity

Total Assets brought by Batman = 135600 (cash) + 115000 (Fair value assets) = 250600

192000 = 250600-liability or Mortgage on Equipment

=> Mortgage on equipment = 250600-192000= 58600

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