I have a situation where a controlling interest in a partnership was acquired by a non-related 3rd party partnership for cash and assumption of liabilities directly from the retiring partner. The existing minority interest partners and new partner will continue the business. Under GAAP this would seem to fall under the ASC 805 (fka SFAS141R) rules, where assets and liabilities are adjusted to FMV rather than continued at historical cost. I'm trying to record the entry for the continuing partnership.
A question has come up b/c the CPAs of the acquiring new majority interest partnership believe the adjustment should be recorded on the books of the new majority interest partner rather than on the books of the continuing partnership with the minority interest partners. That doesn't seem to make sense if the assets and liabilities to be adjusted are in the continuing partnership. The only thing the new partner owns is a controlling interest in the continuing partnership.
Has anyone put one of these together before? Which partnership records the step up, or do either one of them record an adjustment?
A question has come up b/c the CPAs of the acquiring new majority interest partnership believe the adjustment should be recorded on the books of the new majority interest partner rather than on the books of the continuing partnership with the minority interest partners. That doesn't seem to make sense if the assets and liabilities to be adjusted are in the continuing partnership. The only thing the new partner owns is a controlling interest in the continuing partnership.
Has anyone put one of these together before? Which partnership records the step up, or do either one of them record an adjustment?