What is a good response to? Bonus Method & Goodwill Method Using the bonus method, the accountant records assets that were physically relocated to the partnership. Thus, the bonus method does not include a partner’s intangible contributions in the calculation of total partnership capital (Hoyle et al., 2024). A partner would receive a capital bonus if the partner receives more capital through the partnership than the partner initially contributed in cash. Under the bonus method, the partners receive capital according to their percentages of ownership of total partnership capital (Hoyle et al., 2024). Meanwhile, using the goodwill method, the accountant records values for the partners’ intangible contributions and adds these values to the amount of total partnership capital. The partners then receive capital according to their percentages of ownership of total partnership capital (Hoyle et al., 2024). Comparing and Contrasting Methods The bonus method does not assume that the value of intangible contributions may be calculated. Meanwhile, the goodwill method does assume that the value of intangible contributions may be calculated (Hoyle et al., 2024). While the bonus method does not include intangible contributions in the calculation of total partnership capital, the goodwill method does include intangible contributions in the calculation of total partnership capital (Hoyle et al., 2024). Consequently, the goodwill method may generate a larger amount of total partnership capital in the accounting records than the bonus method. Finally, both methods lead to the allocation of total partnership capital to partners based upon the partners' percentages of ownership (Hoyle et al., 2024).
What is a good response to?
Bonus Method &
Using the bonus method, the accountant records assets that were physically relocated to the
Comparing and Contrasting Methods
The bonus method does not assume that the value of intangible contributions may be calculated. Meanwhile, the goodwill method does assume that the value of intangible contributions may be calculated (Hoyle et al., 2024). While the bonus method does not include intangible contributions in the calculation of total partnership capital, the goodwill method does include intangible contributions in the calculation of total partnership capital (Hoyle et al., 2024). Consequently, the goodwill method may generate a larger amount of total partnership capital in the accounting records than the bonus method. Finally, both methods lead to the allocation of total partnership capital to partners based upon the partners' percentages of ownership (Hoyle et al., 2024).
Step by step
Solved in 2 steps
