Required Information[The following Information applies to the questions displayed below.]A = The amount of tangible assets contributed by the new partner into the partnershipB=The amount of capital credited to the new partnerC= Total capital of the partnership before the admission of a new partnerD= Total capital of the partnership after the admission of a new partnerRefer to the above information. Which statement below is correct if goodwill of the old partners is recognized upon the contribution of assets into the partnership by a new partner?Multiple ChoiceB=A and DA and D

In essence, the new partner pays for their share of the existing goodwill, which is reflected in…

Answered: Required Information [The following…

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

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Similar questions

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?
A well written partnership agreement should include each of the following except ________. A. how to settle disputes B. the name of the partnership C. division of responsibilities D. Partners individual tax rate
Which of the following statements is correct when a new partner is admitted to an existing partnership by purchasing a portion of a capital interest of an existing partner? a. The partnership will recognize gain or loss in the transfer of capital from one partner to another partner. b.The partnership is not dissolved by the admission of a new partner by purchase. c.It will result to revaluation or impairment of existing assets of the partnership. d. It will just result to credit to capital of newly admitted partner with corresponding debit to capital of the selling partner
Which one of the following will be recorded in the statement of financial position of the partnership? a. Opening balance of capital from partners' capital account b. Interest on capital from partners' capital account c. Closing balance of capital from partners' capital account d. Interest on drawings from partners' capital account
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.
QUESTION 2 Which one of the following alternatives is correct? A. To ensure that compliance is followed, the financial statements of partnerships must be prepared according to IFRS. B. When recording the valuation adjustments, if the value of a liability is decreased, the valuation account credited with the amount of a decrease. C. The selling price of the partnership business is determined by the value of its assets. D. An existing goodwill account balance is transferred to the partners' capital accounts on admission of a new partner. E. The fair value of the assets of a partnership is equal to the total equity of a partnership.
Answer the following questions regarding a partner's capital account. a. What is a partner's capital account? What methods can be used to determine the capital account and when might these methods be used? A partner's capital account can be thought of as partner's ownership in the entity. A partner's capital account reflects the partner's in the partnership, and it is determined using one of several possible methods defined by the partnership. The partner's ending capital account balance is the same amount as the partner's basis. A tax basis capital account might be used if the partnership otherwise required to prepare financial reporting information. b. Select either "Yes" or "No" to indicate which of the following are included in a partner's ending capital account balance and which are not. 1. The capital account reflects contributions and distributions of cash or other property to or from the partner. 2. The capital account accumulates the partner's share of…
Write the word or group of words that identify each of the following statements. 1.The basis for recording a partner's contribution in the form of noncash assets 2. One who is both a silent and a scret partner. 3.The partnership contract in writing which governs the formation, operation, and dissolution of the partnership.
The objective of preparing Income Statement of partnership is: a. To show the interest on capital of each partner O b. To show drawings of partnership firm O c. To show the net profit or loss of partnership firm O d. To show the capital of each partner The purpose of preparation of Profit and loss appropriation account is: O a. To know the balance of drawings of each partner O b. To know the balance of capital of each partner C. To know the share of profit or loss of each partner O d. To know the balance of goodwill of each partner

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