The balance sheet for the partnership of Nina, Pinta, and Santa Maria at January 1, 2014 follows. The partners share profits and losses in the ratio of 3:2:5, respectively. Nina is retiring from the partnership. By mutual agreement, the assets are to be adjusted to their fair value of $540,000 at January 1, 2014. Pinta and Santa Maria agree that the partnership will pay Nina $135,000 cash for her partnership interest. There is no goodwill is to be recorded. What is the balance of Pinta\'s capital account after Nina\'s retirement? Solution Solution: Option C. $120,000. On adjustment of assets to fair value, the appreciation recorded will be $60,000 ($540,000-$480,000). Nina is paid $135,000, that is, $60,000 ($135,000-$75,000) over and above the capital on her B/S was paid to her. Thus, all the appreciation in assets was given to Nina for her partnership interest. Consequently, capital accounts of Pinta and Santa Maria remained unchanged at $120,000 & $150,000 respectively. .