Partnership Flashcards

1
Q

3 Methods- Creation of a Partnership

A
  1. Exact method
  2. Bonus
  3. Goodwill
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2
Q

Exact Method

A

How much should the new partner contribute in order to have an x% interest in the partnership? Will not reference to goodwill or bonus in the transaction

The incoming partner’s capital is their own contribution (you must calculate)

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3
Q

Bonus method

A

Bonus to existing partners when new partner pays more
Bonus to new partner when new partner pays less

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4
Q

Goodwill method

A

Goodwill credited to old partners

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5
Q

Finger math

A
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