Bonus to new partner O Asset revaluation Asset market value Bonus to old partners
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- How does a newly formed partnership handle the contribution of previously depreciated assets? A. continues the depreciation life as if the owner had not changed B. starts over, using the contributed value as the new cost basis C. shortens the useful life of the asset per the partnership agreement D. does not depreciate the contributed assetWhen a partnership is liquidated, any gains or losses realized by the sale of noncash assets are allocated to the partners based on their income sharing ratio. Why?If total contributed capital is equal to total agreed capital with the new partner's investment is less than his capital credit, then the admission of the new partner involves
- 1. When the investment of a new partner is below the new partners' capital balance and goodwill is not recorded, who will receive the bonus: a.The new partner.b.The old partners in their old profit and loss ratio.c.The old partners in their new profit and loss ratio.d.The old and new partners in their new profit and loss ratio 2.S1: Admission of a new partner by investment generally increases the total assets and capital of the new partnership unless there is a negative asset revaluation.S2: Admission of a new partner by the purchase of interest will never affect the total assets and capital of the new partnershipa. S1 is false, S2 is true b. Both statements are true c. Both statements are false d. S1 is true, S2 is false 3. S1: In lumpsum liquidation, the remaining cash available after realization and payment of liquidation expenses, will always be equal to the total interest of the partners.S2: In installment liquidation, the partner who has the highest absorption capacity shall be…A new partner is admitted to an existing partnership. As a result of admission, the capital balances of incumbent partners increase while the contributed capital of the new partner is less than his capital credit. Which of the following is the best explanation? A. Revaluation of existing assets of old partnership has benn recognized B. Bonus has been given by the incumbent partners to the new partner C. Bonus has been given by the incumbent partners to the new partner and revaluation of existing assets of old partnership has been recognized. D. Bonus has been given by the incumbent partners and impairment loss of existing assets of old partnership has been recognized.The partnership obtained a profit for the period. Salaries were distributed, and so are the interests on beginning capital balances. The next step to be done is to provide bonus to one of the partners. After calculating the bonus and had it given to the partner, the net income became insufficient. What should be done regarding this matter? a. Continue to provide the bonus and the insufficiency should be divided among the partners. b. The bonus should not be given anymore, and the remaining balance to be divided among the partners. c. The whole amount of profit should be divided among the partners equally. d. None of the given.
- Bonus paid to a new partner results in a reduction to the capital accounts of the existing partners in proportion to their capital ratio. T/FIf A is the total capital of the partnership before the admission of a new partner, B is the total capital of the partnership after the investment of a new partner, C is the amount of the new partner’s investment, and D is the amount of capital credit to the new partner, then there isa) A bonus to the old partner if B = A + C and D=C.b) A bonus to the new partner if B = A + C and D=C.c) A bonus to the old partner if B = A + C and D>C.d) A bonus to the new partner if B = A + C and D>C.Which is true regarding admission of a new partner accounted for under the bonus method? * a. The total net assets of the new partnership would be the same as that of the old partnership. b. The new partner’s initial capital would be equal to his or her initial investment. c. Assuming that the recorded assets are properly valued, the net assets of the new partnership would be equal to the net assets of the old partnership plus the investment of the new partner. d. The old partners’ capital account would be the same.
- Select for each of the following either "Yes", it is a guaranteed payment or "No", it is not.\\n\\n1. An amount paid to a partner for the performance of services. \\n2. An amount paid each year to the partners as a return on their investment in the partnership. \\n3. An amount paid that is comparable to a salary or interest payment. \\n4. Payments that are generally not deductible. \\n5. Payments that can result in a loss to the entity. \\n\\nb. Complete the statements below regarding the reporting of guaranteed payments on Form 1065 and its various schedules.\\n\\nGuaranteed payments are \\n on Form 1065. These amounts are also shown on \\n as an item that must be allocated to the partners for them to report as ordinary income. Therefore, in the partnership's "book-tax reconciliation" on \\n, the guaranteed payments are added to book income so that the two measures of the partnership's income can be equal.\\n\\nc. Complete the statement below regarding the reporting of guaranteed…14 A new partner is admitted to an existing partnership. As a result of admission, the capital balances of incumbent partners increase while the contributed capital of the new partner is less than his capital credit. Which of the following is the best explanation? Group of answer choices a. Bonus has been given by the incumbent partners to the new partner. b. Bonus has been given by the incumbent partners to the new partner and revaluation of existing assets of old partnership has been recognized. c. Bonus has been given by the new partner to incumbent partners and impairment loss of existing assets of old partnership has been recognized. d. Revaluation of existing assets of old partnership has been recognized.Bonuses to the old partners arise under each of the following circumstances, except: a. Agreed bonus in the distribution of partnership net income b. Purchase of Interest by a new partner c. Withdrawal of a partner and the interest is purchased by the partnership d. Total contributed capital of the new partner is more than the agreed capital