Riley and Smith are partners with present capital balance (book values) of P500,000 and P400,000, respectively. The partners share profits and losses according to the following percentages: 60% for...

Extracted text: Riley and Smith are partners with present capital balance (book values) of P500,000 and P400,000, respectively. The partners share profits and losses according to the following percentages: 60% for Riley and 40% for Smith. Tyler is to join the original partnership upon contribution of P250, 000 to the partnership in exchange for a 20% interest capital and a 15% interest in profits and losses. Tyler's contribution consists of P170,000 of cash and equipment having a fair value of P80,000(the tax basis of equipment is P42,000). The assets of the original partnership have a book value equal to their fair value except that the land has a book value of P15,000 and a fair value of P55,000. The tax bases for Riley and Smith's capital balances before Tyler's entry are P425,000 and P330,000, respectively. The capital balance of Riley after the admission of Tyler's if goodwill (revaluation of asset) method is used: