Problem
Assume that Partners A and B have Capital Accounts equal to $400,000 and $250,000, respectively. Partner C wants to join the partnership as one-third partner. Partner C contributes $785,000 in cash to the partnership in return for a one-third interest. Prior to the admission of Partner C, Partners A and B wish to revalue the long-term assets of the partnership. They obtain an appraisal of the land and building that indicated a current value of $900,000. The land and building are currently reported on the partnership balance sheet at $250,000.
Task
Record the journal entry on the books of the partnership to reflect the revaluation of the land and building and the admission of Partner C with a capital contribution of $785,000. Assume that despite the evidence of a previously unrecognized intangible asset, the partners do not wish to record the intangible asset. Assume that the partners allocate profits equally.