New partners investment: a new partner acquires a share in partnership by investing in the business in the form of cash or other assets. There are three possible cases when a new partner invests in partnership. The new partner investment equals the new partner’s proportional share in partnership’s book value. The new partner’s investment is more than the new partner’s proportion of partnership’s book value. This indicates that the partnership assets were undervalued or a unrecorded goodwill exists. The new partner’s investment is less than his proportional share in partnership book value. This suggests that the partnership assets were overvalued on its books or the new partner may be contributing goodwill in addition to other assets To choose: the correct answer to determine amount to be credited to partner’s when property other than cash is invested by him.

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Answer 1

Question

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.

Chapter 15, Problem 15.16.1P

To determine

New partners investment: a new partner acquires a share in partnership by investing in the business in the form of cash or other assets. There are three possible cases when a new partner invests in partnership.

The new partner investment equals the new partner’s proportional share in partnership’s book value.

The new partner’s investment is more than the new partner’s proportion of partnership’s book value. This indicates that the partnership assets were undervalued or a unrecorded goodwill exists.

The new partner’s investment is less than his proportional share in partnership book value. This suggests that the partnership assets were overvalued on its books or the new partner may be contributing goodwill in addition to other assets

To choose:the correct answer to determine amount to be credited to partner’s when property other than cash is invested by him.

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Answer 2

Question

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.

Chapter 15, Problem 15.16.1P

To determine

New partners investment: a new partner acquires a share in partnership by investing in the business in the form of cash or other assets. There are three possible cases when a new partner invests in partnership.

The new partner investment equals the new partner’s proportional share in partnership’s book value.

The new partner’s investment is more than the new partner’s proportion of partnership’s book value. This indicates that the partnership assets were undervalued or a unrecorded goodwill exists.

The new partner’s investment is less than his proportional share in partnership book value. This suggests that the partnership assets were overvalued on its books or the new partner may be contributing goodwill in addition to other assets

To choose:the correct answer to determine amount to be credited to partner’s when property other than cash is invested by him.

Expert Solution & Answer

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Check out sample textbook solution

Answer 3

Question

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.

Chapter 15, Problem 15.16.1P

To determine

New partners investment: a new partner acquires a share in partnership by investing in the business in the form of cash or other assets. There are three possible cases when a new partner invests in partnership.

The new partner investment equals the new partner’s proportional share in partnership’s book value.

The new partner’s investment is more than the new partner’s proportion of partnership’s book value. This indicates that the partnership assets were undervalued or a unrecorded goodwill exists.

The new partner’s investment is less than his proportional share in partnership book value. This suggests that the partnership assets were overvalued on its books or the new partner may be contributing goodwill in addition to other assets

To choose:the correct answer to determine amount to be credited to partner’s when property other than cash is invested by him.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 4

Question

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.

Chapter 15, Problem 15.16.1P

To determine