If an existing partner withdraws from a partnership which is truea.his or her interest may be sold to the partnership or an individual partner.b.the consideration received for that partner's interest may suggest the existence of undervalued existing assets and/or goodwill.c.either the bonus or the goodwill method may be used to record the transaction if the partnership acquires the withdrawing partner's interest.d.all of the above

Existing partner withdraws his or her rights in two generally known ways i.e. retirement or death.…

Answered: If an existing partner withdraws from a…

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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If an existing partner withdraws from a partnership which is true

a.	his or her interest may be sold to the partnership or an individual partner.
b.	the consideration received for that partner's interest may suggest the existence of undervalued existing assets and/or goodwill.
c.	either the bonus or the goodwill method may be used to record the transaction if the partnership acquires the withdrawing partner's interest.
d.	all of the above

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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