Under the goodwill method,a.declines in asset values prior to new partner admission are recorded, but not asset appreciation.b.the total capital of the new partnership must approximate the fair value of the entity.c.a new partner’s capital balance may be less than his or her contribution.d.All of the above.

The goodwill method is used to determine the amount of goodwill that should be recorded when two…

Answered: Under the goodwill method,

Business

Accounting

Under the goodwill method,

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter11: Partnerships: Distributions, Transfer Of Interests, And Terminations

Section: Chapter Questions

Problem 3DQ

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Question

Under the goodwill method,

a.	declines in asset values prior to new partner admission are recorded, but not asset appreciation.
b.	the total capital of the new partnership must approximate the fair value of the entity.
c.	a new partner’s capital balance may be less than his or her contribution.
d.	All of the above.

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

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