Because Natalie has been so successful operating Cookie Creations, Katy would like to have Natalie become her partner. Katy believes that together they will create a thriving cookie-making business. Recall that Katy is Natalie s high school friend and has been operating her bakery for approximately 10 months. Natalie is quite happy with her current business set-up. Up until now, she had not considered joining forces with anyone. From past meetings with Katy, however, Natalie has gathered the following information about Katy s business and compared it with her own results. • The current fair values of the assets and liabilities of both businesses are as follows: All assets would be transferred into the partnership. The partnership would assume all of the liabilities of the two proprietorships. The Baker s Nook bank loan is due on October 31, 2015. • Katy operates her business from leased premises. She has just signed a lease for 12 months. Monthly rent will be $1,000; Katy s landlord has agreed to draw up a new lease agreement that would be signed by both partners. • Katy has no assets and has a lot of student loans and credit card debt. Natalie s assets consist of investments in Canada Savings Bonds. Natalie has no personal liabilities. • Katy is reluctant to have a partnership agreement drawn up. She thinks it s a waste of both time and money. As Katy and Natalie have been friends for a long time, Katy is confident that all problems can be easily resolved over a ni
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