Answered: Partner’s interest in a partnership is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Partner’s interest in a partnership is generally equal to:

a)The fair value of net assets at date of contribution.

b)The sum of the fair values of the assets the partner contributes to the firm, increased by any liabilities of other partners assumed and decreased by any personal liabilities that are assumed by other partners.

c)The sum of the bases of the individual assets the partner contributes to the firm decreased by the partner’s share of partnership liabilities.

d)The unamortized cost of the assets to the partner.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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how would the increase in liabilities of other partners assumed would contribute to the partner's interest?

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