Upon learning differences in methods of admitting a new partner, which between purchase of interest and investment of assets would you prefer if you were: a) The incoming partner b) The existing partner Justify by identifying the advantages and disadvantages of each method from each method from each partner’s point of view

Upon learning differences in methods of admitting a new partner, which between purchase of interest and investment of assets would you prefer if you were: a) The incoming partner b) The existing partner Justify by identifying the advantages and disadvantages of each method from each method from each partner’s point of view

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter19: Accounting For Partnerships

Section: Chapter Questions

Problem 2MC

See similar textbooks

Similar questions

Any assets invested by a particular partner in a partnership ________. A. do not become a partnership asset but instead remain with the partner B. can be used only by the investing partner C. become the property of all the partners D. are the basis for all profit sharing
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 asset
Which of the following is a disadvantage of the partnership form of organization? A. limited life B. no taxation at the partnership level C. flexibility in business operations D. combining of financial resources
When 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?
In case of admission of a partner, the first adjustment that need to be prepared is?? A. Bank account B. Profit and loss account adjustment C. The revaluation of assets D. Realization of income or loss S1: In a partnership, at least one partner is required to be a/an limited partner in order to ensure partnership creditors will be paid and protected S2: Unpaid liabilities should be included in computing for the total loss attributed to the partners. * A. Both statements are true B. s1 True; S2 False C. S2 True; S1 False D. Both statements are false S1: Joint Control is present if tow ore more parties have greater than 50% Control.S2: One Party has more than 50% in a joint arrangement * A. Both statements are false B. Both statements are true C. S2 True; S1 False D. s1 True; S2 False S1: If the total contributed capital of THE partnership is greater than the total agreed capital, it is possible that a goodwill be recognized or an undervaluation of asset occurred.S2: Noncash…
Explain the difference between the admission of a new partner to a partnership (a) by purchase of an interest from another partner and (b) by contribution of assets to the partnership.
When a new partner is admitted to an existing partnership through the purchase of a portion of existing interest of incumbent partner, which of the following is correct? a. The total capital of the old and new partnership will be the same. b. There will be increase in the total assets of the partnership equivalent to the amount paid by newly admitted partner. c. Goodwill may be recognized by virtue of the admission d. The partnership will recognize gain or loss on the difference between the amount paid and capital transferred.
When a new partner is admitted into a partnership and the new partner receives a capital credit greater than the tangible assets contributed, which of the following explains the difference? I. The old partners' goodwill is being recognized. II. The new partner's goodwill is being recognized Select one: a. II only b. Both I and II c. Either I or II d. I only
Choose the correct. If a partnership is liquidated, how is the final allocation of business assets made to the partners?a. Equally.b. According to the profit and loss ratio.c. According to the final capital account balances.d. According to the initial investment made by each of the partners.
In the absence of other relevant data, when a new partner is admitted in an existing partnership through the acquisition of capital interest of incumbent partners, which is always true? Group of answer choices The partnership shall recognize goodwill arising from the admission of a new partner. The total capital of the partnership will not change despite the admission of a new partner. The partnership shall recognize gain or loss as a result of the disposal of capital interest. The total assets of the partnership will increase by the amount of the net proceeds of the disposal of capital interest.
Choose the response that correctly describes a guaranteed payment. (a) A loan payment from the partnership to pay back a loan from a partner. (b) A loan payment from the partner to pay back a loan from a partnership. (c) A payment made to a partner from the profits of the partnership. (d) A payment made to a partner without regard to the income of the partnership
If an existing partner withdraws from a partnership which is true a. his or her interest may be sold to the partnership or an individual partner. b. the consideration received for that partner's interest may suggest the existence of undervalued existing assets and/or goodwill. c. either the bonus or the goodwill method may be used to record the transaction if the partnership acquires the withdrawing partner's interest. d. all of the above