Burns has a capital balance of $98,000 after adjusting assets to fair market value. Van Ness contributed $56,000 to receive a 45% interest in a new partnership with Burns. Determine the amount and recipient of the partner bonus.

Van Ness, $13,300

Explanation:

From the question, we are told that Burns has a capital balance of $98,000 after adjusting assets to fair market value and that Van Ness contributed $56,000 to receive a 45% interest in a new partnership with Burns. The calculation goes thus :

Equity of Burns = $98,000

Van Ness contribution = $56,000

Total equity = $98,000 + $56,000

= $154,000

Van Ness equity interest = 45%

Van Ness equity after admission will now be:

= 45% × $154,000

= 0.45 × $154,000

= $69,300

The recipient of the partner bonus is Van Ness end the amount will be his equity after admission minus his contribution. This will be:

= $69,300 - $56,000

= $13,300

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