Chapter 14, Problem 4.3E

To determine

Concept introduction

Partnership firm A partnership firm is a firm in which two or more people manage a business and share its return. The allocation of profit and loss between the partners is based on the profit sharing ratio given in the partnership deed. If no priority system is followed, then the profit and loss will be divided equally.

To prepare: The value of the two might not be same when if P wants to sell half of his interest in the partnership to J and half to O.