Chapter 9 - Partnerships Flashcards
1
Q
When a partnership is formed, assets and liabilities are valued how?
A
Assets valued at FV
Liabilities values at PV
2
Q
The Bonus Method of Creating a new partner:
A
The bonus goes to the existing partners when the new partner pays more than NBV. The bonus goes to the new partner when the new partner pays less than NBV.
3
Q
The bonus method for a withdrawal of a partner is:
A
The balance of the withdrawing partner - the amount that person is paid = the bonus that is allocated to the remaining partners based on their remaining P/L ratio.
4
Q
The goodwill method for withdrawal of a partner:
A
The payment to the withdrawing partner is allocated to all partners based on their P/L ratio.
