If a retiring partner agrees to withdraw less than the book value of his/her interest, the effect of this transaction will decrease the capital account of the remaining partnes
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If a retiring partner agrees to withdraw less than the book value of his/her interest, the effect of this transaction will decrease the capital account of the remaining partnes
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- True or False. The admission of a partner does not change the composition of the partners’ equity if the new partner purchases the old partner’s interest by paying the old partner directly. Please explain why thanksHow may the capital deficiency of an insolvent partner can be eliminated?When a partner decides to withdraw or retire, he may sell his capital interest either to outsiders, the remaining partners, but not to the partnership True False
- A partner's withdrawal of assets from a LLP that is considered a permanent reduction in that partner's equity is debited to the partner's: Select one :- a. Retained Earnings account b. Loan Receivable account c. Drawing account d. Capital accountWhen a partner retires from the partnership and the settlement of his interest exceeded his capital interest. Using the bonus method, the excess shall beWhich of the following can be used to offset a passive loss? a.Dividend income from stock held as an investment b.Active income such as wages c.Pension income d.Passive income such as income from a limited partnership
- In the liquidation of a partnership, why might a partner be concerned that a fellow partner has a deficit net capital balance, and how might such a deficit be eliminated?In the liquidation of a partnership, a loan payable to a partner: a) May be offset against that partners’ capital account balance before liquidation commences. b) Will not advance the time of payment to that partner during the liquidation. c) Has the same priority as amounts payable to outside creditors of the partnership. d) Must be closed to that partners’ drawing account.When there is a capital deficiecy, the effect is that a. the cash and other assets will also be deficient b. the partner' equity will increase c. there is no effect on the assets and liabilities the liabilities and the partners' euquitey will also decrease
- During a liquidation, if a partner’s capital account balance drops below zero, what Should Happen? The other partners file a legal suit against the partner with the deficit balance. The partner with the highest capital balance contributes sufficient assets to eliminate the deficit. The deficit balance is removed from the accounting records with only the remaining partners sharing in future gains and losses. The partner with a deficit contributes enough assets to offset the deficit balance.Choose the correct. During a liquidation, if a partner’s capital account balance drops below zero, what should happen?a. The other partners file a legal suit against the partner with the deficit balance.b. The partner with the highest capital balance contributes sufficient assets to eliminate the deficit.c. The deficit balance is removed from the accounting records with only the remaining partners sharing in future gains and losses.d. The partner with a deficit contributes enough assets to offset the deficit balance.During liquidation, a partners’ capital account balance drops below zero. What should happen? a. The other partners should file a legal suit against the partner with the deficit balance. b. The partner with the highest capital balance should contribute sufficient assets to eliminate the deficit. c. The deficit balance should be removed from the accounting records with only the remaining partners sharing in future gains and losses. d. The partner with a deficit should contribute enough assets to offset the deficit balance.