ACCT 167- Ch 14 SmartBook

Assume the articles of partnership specify that profits are to be allocated 60% to partner A and 40% to partner B. If, however the articles of partnership are silent concerning the allocation of a partnership loss, then any loss is allocated A) no allocation is made until the partner's agree on a loss distribution method. B) according to each partner's relative capital balance. C) equally among all partners. D) in the same manner as partnership profits.

D) in the same manner as partnership profits.

True or false: When an individual is admitted to a partnership and receives a partnership capital percentage in exchange for a contribution that includes goodwill, the amount of goodwill recognized is determined algebraically.

True

Select all that apply: Accounting for a partnership's owners' equity tends to be much less complex than for a corporation because A) government regulations require greater disclosures for corporations to protect the investing public and others B) absentee ownership tends to characterize partnerships more than corporations. C) partnerships tend to have more owners than corporations. D) partnerships tend to be smaller and have less complex equity transactions than corporations.

A) government regulations require greater disclosures for corporations to protect the investing public and others D) partnerships tend to be smaller and have less complex equity transactions than corporations.

Select all that apply: The articles of partnership document A) is a negotiated agreement created by the partners. B) represents a legal agreement that governs the operation of the partnership. C) provides guidance to the partnership but is not legally binding. D) largely determines the accounting procedures followed for the partnership.

A) is a negotiated agreement created by the partners. B) represents a legal agreement that governs the operation of the partnership. D) largely determines the accounting procedures followed for the partnership.

Under the bonus method any excess payment to a withdrawing partner beyond his/her capital balance A) reduces the capital balances of the remaining partners. B) increases the capital balances of the remaining partners. C) does not affect the capital balances of the remaining partners.

A) reduces the capital balances of the remaining partners.

Select all that apply: Potential future effects of the valuation of property contributed to a partnership include A) settlement of a partner's interest upon partner retirement. B) settlement of a partner's interest upon partnership liquidation. C) capital account balances often affect partnership profit and loss distribution. D) depreciation of the contributed property can affect cash flows to the partnership.

A) settlement of a partner's interest upon partner retirement. B) settlement of a partner's interest upon partnership liquidation. C) capital account balances often affect partnership profit and loss distribution.

Alternative legal forms of partnerships have been provided in many state laws that both limit the liability of individual partners while maintaining the __________ benefits of the partnership form of business organization.

tax

ABC partnership shares profits and losses 20% to A, 30% to B, and 50% to C. If C retires from the partnership and receives a $10,000 bonus, the bonus reduces the capital balances of A and B by A) 40% to A and 60% to B. B) 50% to A and 50% to B. C) 20% to A and 30% to B. D) 60% to A and 40% to B.

A) 40% to A and 60% to B.

Select all that apply: What are some partnership activities that are considered capital transactions? A) Allocation of partnership profits and losses. B) Admission of a new partner. C) Retirement of a partner. D) The partnership acquisition of a building in exchange for partnership cash.

A) Allocation of partnership profits and losses. B) Admission of a new partner. C) Retirement of a partner.

If an individual partner's allocation of annual partnership profits exceeds his or her annual partnership withdrawals, what net effect should be reflected in the that partner's capital account? A) An increase. B) A decrease. C) No effect.

A) An increase.

Select all that apply: Which of the following is not a reason for forming a partnership as opposed to a corporation for a new business? A) Partnership income typically flows tax-free to the partners. B) Corporate forms are legally unavailable for some business activities. C) Partnerships can result in double-taxation. D) Ease of formation for partnerships.

A) Partnership income typically flows tax-free to the partners. C) Partnerships can result in double-taxation.

Select all that apply: Often a partner may sell his partnership interest to another individual. Why must all partners agree to allow this new partner the right to participate in the management of the partnership? A) To protect the current partners from unwanted intrusion by the new partner. B) No rights, including the right to participate in management, can be sold by any of the partners to an outside party. C) Current partners may be reluctant to yield management decision making that is essential to the well-being of the partnership.

A) To protect the current partners from unwanted intrusion by the new partner. C) Current partners may be reluctant to yield management decision making that is essential to the well-being of the partnership.

Select all that apply: In addition to tangible asset contributions, a new partner may bring other intangible value to a partnership including A) professional reputation. B) a special talent or skill set. C) real estate property. D) an ongoing set of business clients.

A) professional reputation. B) a special talent or skill set. D) an ongoing set of business clients.

Select all that apply: The Uniform Partnership Act A) provides a legal definition of a partnership. B) carries no legal weight in court decisions. C) has been adopted by all states in some form. D) establishes uniform standards for many partnership characteristics.

A) provides a legal definition of a partnership. C) has been adopted by all states in some form. D) establishes uniform standards for many partnership characteristics.

Select all that apply: A Subchapter S Corporation A) provides limited liability to its owners. B) must have only one class of stock. C) can have an unlimited number of stockholders. D) is taxed in the same way as a partnership.

A) provides limited liability to its owners. B) must have only one class of stock. D) is taxed in the same way as a partnership.

Select all that apply: A new partner exchanges a $20,000 cash payment to the partnership business for a 10% partnership ownership interest. Under the bonus method A) the capital balance of the new partner will equal 10% of partnership net assets including the $20,000 cash payment. B) goodwill will be recognized upon the admission of the new partner. C) the capital balance of the new partner will equal 10% of partnership net assets excluding the $20,000 cash payment. D) no revaluation of existing partnership assets takes place.

A) the capital balance of the new partner will equal 10% of partnership net assets including the $20,000 cash payment. D) no revaluation of existing partnership assets takes place.

Select all that apply: Compared to a corporation's balance sheet, the owners' equity section of a partnership A) typically consists of solely partner's capital accounts. B) shows separate balances for invested capital and retained earnings. C) does not usually distinguish between contributed and earned capital. D) typically provides a much more limited range of information.

A) typically consists of solely partner's capital accounts. C) does not usually distinguish between contributed and earned capital. D) typically provides a much more limited range of information.

Select all that apply: A limited liability partnership (LLP) ___. A) limits a partner's legal liability to the amount of the partner's investment in the partnership B) limits the partners' individual liabilities resulting from damages awarded by a court C) is a popular organizational form for major public accounting firms D) does not limit individual partner's liability arising from contractual obligations of the partnership

B) limits the partners' individual liabilities resulting from damages awarded by a court C) is a popular organizational form for major public accounting firms D) does not limit individual partner's liability arising from contractual obligations of the partnership

Select all that apply: Accounting techniques for recognizing a partner's contribution of a special valuable talent to a partnership include A) the mutual agency method. B) the equal capital method. C) the bonus method. D) the goodwill method.

C) the bonus method. D) the goodwill method.

When a withdrawing partner's profit and loss ratio differs from her partnership capital percentage, which of the following can be utilized to determine the total fair value of the partnership at the time withdrawal? A) by the sum of the book values of the partners' capital accounts. B) by an implied value based on the negotiated payment to Windsor. C) through an appraisal of partnership net assets excluding goodwill. D) through an appraisal of partnership net assets including goodwill.

D) through an appraisal of partnership net assets including goodwill.

According to the Uniform Partnership Act, an obligation of a limited liability partnership arising from a contract is solely the obligation of the _________ .

partnership

Select all that apply: Under the hybrid method of accounting for a partner's withdrawal from a partnership A) any asset revaluations are allocated to all partners based on their profit and loss percentages. B) a bonus from the remaining partners to the withdrawing partner may occur. C) goodwill is typically recognized and allocated to all partners based on their profit and loss percentages. D) the partnership's net assets are revalued to current fair values.

A) any asset revaluations are allocated to all partners based on their profit and loss percentages. B) a bonus from the remaining partners to the withdrawing partner may occur. D) the partnership's net assets are revalued to current fair values.

Select all that apply: A limited partnership (LP) A) has investors whose liability may be limited to the amount they have invested in the partnership. B) often has investors that are not allowed to participate in the management of the partnership. C) has general partners who are designated to assume responsibility for all partnership debts. D) does not convey the tax benefits that accompany a regular partnership.

A) has investors whose liability may be limited to the amount they have invested in the partnership. B) often has investors that are not allowed to participate in the management of the partnership. C) has general partners who are designated to assume responsibility for all partnership debts.

The basic format of a statement of partners' capital is A) beginning capital balances - income allocations + drawings = ending capital balances B) beginning capital balances - income allocations - drawings = ending capital balances C) beginning capital balances + income allocations - drawings = ending capital balances D) beginning capital balances + income allocations + drawings = ending capital balances

C) beginning capital balances + income allocations - drawings = ending capital balances

True or false: An advantage of a limited liability company (LLC) is that the number of owners is not restricted.

True

A limited partnership helps the individual partners protect their personal financial position through the avoidance of unlimited __________ from the partnership.

liability

A partner contributes a building to her partnership that has appreciated in value. The partnership's valuation basis for the building should be A) the contributing partner's previously recorded value. B) original cost to the contributing partner. C) the contributing partner's book value. D) fair value.

D) fair value.

Under the bonus method for recognizing a partner's intangible contribution A) the partners' capital account balances will correspond to their initial tangible asset contributions to the partnership. B) the partner contributing the intangible property provides a bonus to the other partners. C) the partners' capital accounts are unaffected. D) no asset is recorded; only partners' capital accounts are affected.

D) no asset is recorded; only partners' capital accounts are affected.

Select all that apply: Under the goodwill method for recognizing a partner's intangible contribution A) goodwill is recognized as an asset of the partnership to reflect the intangible contribution. B) the partner contributing the intangible property provides a bonus to the other partners. C) no asset is recorded; only partners' capital accounts are affected. D) the partner deemed to be contributing goodwill is given a capital credit to recognize the asset brought to the partnership.

A) goodwill is recognized as an asset of the partnership to reflect the intangible contribution. D) the partner deemed to be contributing goodwill is given a capital credit to recognize the asset brought to the partnership.

The statement of partners' capital effectively replaces the statement of __________ __________ for a corporation.

retained earnings

Under the goodwill method for recognizing a partner's intangible contribution A) the partner deemed to be contributing goodwill is given a capital credit to recognize the asset brought to the partnership. B) no asset is recorded; only partners' capital accounts are affected. C) goodwill is recognized as an asset of the partnership to reflect the intangible contribution. D) the partner contributing the intangible property provides a bonus to the other partners.

A) the partner deemed to be contributing goodwill is given a capital credit to recognize the asset brought to the partnership. C) goodwill is recognized as an asset of the partnership to reflect the intangible contribution.

At year end, a partner's drawing account A) remains open to accumulate partner withdrawal throughout the life of the partnership. B) is closed to the partner's capital account. C) is closed to the partnership's retained earnings account. D) is closed to a partnership salaries account.

B) is closed to the partner's capital account.

Select all that apply: Typically included in an articles of partnership agreement are A) the number of common shares of stock to be issued to each of the partners. B) the rights and responsibilities of each partner. C) how to distribute the profits and losses of the partnership. D) the procedures for admitting a new partner.

B) the rights and responsibilities of each partner. C) how to distribute the profits and losses of the partnership. D) the procedures for admitting a new partner.

Select all that apply: When a new partner is formally admitted to a partnership A) the partnership must terminate all business activities. B) the previous partnership will legally continue in the same manner as before the partner withdrew. C) a legal dissolution of the previous partnership occurs. D) a new partnership is formed.

C) a legal dissolution of the previous partnership occurs. D) a new partnership is formed.

Under the goodwill method to record a new partner's admission to a partnership, recognition of goodwill to the original partners is equitably allocated: A) according to the capital ratios. B) equally across the current partners. C) according to the profit and loss percentages.

C) according to the profit and loss percentages.

Select all that apply: Under the goodwill method for recognizing a partner's intangible contribution A) the partner deemed to be contributing goodwill is given a capital credit to recognize the asset brought to the partnership. B) the partner contributing the intangible property provides a bonus to the other partners. C) no asset is recorded; only partners' capital accounts are affected. D) goodwill is recognized as an asset of the partnership to reflect the intangible contribution.

A) the partner deemed to be contributing goodwill is given a capital credit to recognize the asset brought to the partnership. D) goodwill is recognized as an asset of the partnership to reflect the intangible contribution.

Upon a partner's withdrawal from a partnership, the goodwill method will credit each partner's capital account for their share of goodwill A) according to their capital ratios. B) according to their profit and loss sharing ratios. C) equally across all remaining partners.

B) according to their profit and loss sharing ratios.

Select all that apply: Among common methods to account for the withdrawal of a partner from a partnership include the A) original cost method. B) hybrid (revaluation/bonus) method. C) bonus method. D) goodwill method.

B) hybrid (revaluation/bonus) method. C) bonus method. D) goodwill method.

When partners make cash contributions to a partnership, a credit to each individual partner's __________ account records the contribution.

capital

Select all that apply: Partnerships often serve as a preferred organization form for businesses compared to the corporate form because A) partnerships are easier and less costly to form than corporations. B) tax benefits exist for partnerships relative to corporations. C) partnerships can usually raise more capital than corporations. D) some state regulations prevent doctors and attorneys from forming corporations.

A) partnerships are easier and less costly to form than corporations. B) tax benefits exist for partnerships relative to corporations. D) some state regulations prevent doctors and attorneys from forming corporations.

Partners A and B allocate annual partnership income as follows. Each partner receives 20% of their beginning capital balances. Each partner also receives a $10,000 salary. Remaining income is distributed 60% to partner A and 40% to partner B. If current year net income is $58,000 and beginning capital balance for A and B are $90,000 and $75,000, respectively, how much net income is allocated to partner B? A) $31,000 B) $27,000 C) $25,000 D) $23,000

B) $27,000

Under the goodwill method to record a new partner's admission to a partnership, recognition of goodwill to the original partners is equitably allocated: A) according to the capital ratios. B) according to the profit and loss percentages. C) equally across the current partners.

B) according to the profit and loss percentages.

Select all that apply: Ways in which an individual can gain admission into a partnership include A) purchasing common stock ownership shares in the stock market. B) buying an ownership interest directly from one or more existing partners. C) contributing intangible assets directly to the partnership. D) contributing tangible assets directly to the partnership.

B) buying an ownership interest directly from one or more existing partners. C) contributing intangible assets directly to the partnership. D) contributing tangible assets directly to the partnership.

Select all that apply: Included in the advantages of the partnership form of business organization are A) the requirement of a written agreement that legally binds the partners. B) ease of formation. C) the ability to make any arrangement desired among the partners for income distribution and control of business decision making. D) a lower cost of formation compared to the corporate form.

B) ease of formation. C) the ability to make any arrangement desired among the partners for income distribution and control of business decision making. D) a lower cost of formation compared to the corporate form.

If an individual partner contributes property to a partnership A) that partner retains a priority claim to the contributed property upon partnership liquidation. B) the partnership may not dispose of the property without the express permission of the partner who contributed the property. C) that partner no longer has an individual claim to the property.

C) that partner no longer has an individual claim to the property.

A partner brings valuable expertise to a partnership. The partnership records no asset for this expertise, but the contributing partner nonetheless receives an additional capital credit. By crediting this partners capital account, the partnership has employed the __________ method.

bonus

Select all that apply: A limited liability company (LLC) ___. A) in many states limits an owner's risk to his or her own investments B) with respect to partner liability is similar to a Subchapter S entity C) with respect to restriction on the number of owners is similar to a Subchapter S corporation D) is classified as a partnership for tax purposes and court purposes

A) in many states limits an owner's risk to his or her own investments B) with respect to partner liability is similar to a Subchapter S entity D) is classified as a partnership for tax purposes and court purposes

Select all that apply: The articles of partnership document A) largely determines the accounting procedures followed for the partnership. B) is a negotiated agreement created by the partners. C) provides guidance to the partnership but is not legally binding. D) represents a legal agreement that governs the operation of the partnership.

A) largely determines the accounting procedures followed for the partnership. B) is a negotiated agreement created by the partners. D) represents a legal agreement that governs the operation of the partnership.

Select all that apply: A tax advantage of partnerships over the corporate business organizational form is A) tax rates for partnership entities are lower than for corporations. B) the avoidance of double taxation. C) a partner's share of partnership operating losses can be used to offset income on the partner's individual tax return. D) partnership income is only taxed when it is distributed in cash to the individual partners.

B) the avoidance of double taxation. C) a partner's share of partnership operating losses can be used to offset income on the partner's individual tax return.

Select all that apply: The Uniform Partnership Act: A) carries no legal weight in court decisions. B) establishes uniform standards for many partnership characteristics. C) provides a legal definition of a partnership. D) has been adopted by all states in some form.

B) establishes uniform standards for many partnership characteristics. C) provides a legal definition of a partnership. D) has been adopted by all states in some form.

True or false: The Uniform Partnership Act was created in part to provide consistent standards and application of partnership law across state lines.

True

A partner's capital account represents a claim on the partnership business as a whole, but not a specific claim on any individual __________ .

asset or property

The legal term stating that each partner possesses the right to incur liabilities on behalf of the partnership in the normal course of business is __________ __________ .

mutual agency

A partner receives an amount in excess of his/her capital balance upon withdrawing from the partnership. A possible reason for the excess payment is that the partnership agreement calls for a revaluation of the partnership to its __________ __________ .

fair value

Select all that apply: Under the hybrid method of recording a new partner's admission to a partnership, A) goodwill is recognized and allocated to the original partners. B) asset revaluations are credited to the original partners. C) a bonus may be recorded to align partners' capital accounts. D) identifiable assets are revalued to fair value.

B) asset revaluations are credited to the original partners. C) a bonus may be recorded to align partners' capital accounts. D) identifiable assets are revalued to fair value.

According to the Internal Revenue Code, partnership income A) is subject to income taxes paid at the partnership entity level. B) flows through to the individual tax returns of the individual partners. C) is taxed at both the partnership and individual partner level.

B) flows through to the individual tax returns of the individual partners.

Zoe is admitted to the Xavier-Yang partnership in exchange for a cash investment. Zoe's initial capital credit is greater that her cash contribution. Under the goodwill method of recording the new partner's investment, A) Xavier, Yang, and Zoe are viewed as contributing goodwill. B) No partner's contribution to goodwill is recognized. C) Zoe's contribution of goodwill is recognized. D) Xavier's and Yang's contributions to goodwill are recognized.

C) Zoe's contribution of goodwill is recognized.

Any change in the set of specific individuals that comprise a partnership automatically leads to a legal __________ .

dissolution

Traditionally, the contribution of property by a partner to a partnership is recorded at __________ value.

fair

Under the hybrid method of recording the admission of a new partner, identifiable partnership assets are revalued to fair value, but no __________ is recorded.

goodwill

Despite the notion that a partnership is an extension of its individual partners, a noncash asset contributed to the partnership should be recorded at its contribution-date __________ value.

fair

Select all that apply: Assume all periodic partnership revenues and expenses have been closed to an Income Summary account. Final closing entries are then needed to A) close the partners' drawing accounts to their individual capital accounts. B) close the partners' drawing accounts to the retained earnings of the partnership. C) close the Income Summary account to the retained earnings of the partnership. D) close the Income Summary account by distributing the total profit or loss to the individual partners' capital accounts.

A) close the partners' drawing accounts to their individual capital accounts. D) close the Income Summary account by distributing the total profit or loss to the individual partners' capital accounts.

The emergence of several alternative partnership forms derives from the desire to avoid double taxation and A) increase the risk and rewards to individual partners. B) limit the personal liability exposure of individual partners. C) maintain the personal liability exposure of individual partners. D) limit the amount of capital raised by partnerships.

B) limit the personal liability exposure of individual partners. reason: limiting personal liability decreases the risk of individual partners

Select all that apply: Partnerships often serve as a preferred organization form for businesses compared to the corporate form because A) partnerships are easier and less costly to form than corporations. B) tax benefits exist for partnerships relative to corporations. C) some state regulations prevent doctors and attorneys from forming corporations. D) partnerships can usually raise more capital than corporations.

A) partnerships are easier and less costly to form than corporations. B) tax benefits exist for partnerships relative to corporations. C) some state regulations prevent doctors and attorneys from forming corporations.

Common approaches to recognizing intangible factors that a new partner may bring to a partnership include the __________ and __________ methods.

bonus and goodwill

True or false: Upon a partner's withdrawal from a partnership, the resulting distribution will unlikely equal the balance in the partner's capital account.

True

Accounting methods for formally recording the admission of a new partner include A) creating an Additional Paid-in Capital account for the new partner's contribution to achieve entry into the partnership. B) retaining the partnership book value through the bonus method. C) revaluing existing partnership assets to fair value and recognizing goodwill. D) revaluing existing partnership assets to fair value without recognizing goodwill.

B) retaining the partnership book value through the bonus method. D) revaluing existing partnership assets to fair value without recognizing goodwill.

In determining the amount to pay a partner upon withdrawal, the partnership employs current assessments for both land and goodwill, This payment therefore A) requires that goodwill be recognized on the partnership books. B) requires a bonus from the continuing partners to Windsor. C) can be accounted for using either the goodwill, bonus, or hybrid method. D) requires a land revaluation on the partnership books.

C) can be accounted for using either the goodwill, bonus, or hybrid method.

Select all that apply: A limited partnership (LP) A) has general partners who are designated to assume responsibility for all partnership debts. B) has investors whose liability may be limited to the amount they have invested in the partnership. C) often has investors that are not allowed to participate in the management of the partnership. D) does not convey the tax benefits that accompany a regular partnership.

A) has general partners who are designated to assume responsibility for all partnership debts. B) has investors whose liability may be limited to the amount they have invested in the partnership. C) often has investors that are not allowed to participate in the management of the partnership.

If the articles of partnership are silent with regard to partnership income distribution to the individual partners, then A) partnership income is allocated equally among all partners. B) partnership income is allocated according to each partner's relative capital balance. C) no allocation is made until the partner's agree on an income distribution method. D) partnership income is allocated according to the amount of revenue generated by each individual partner.

A) partnership income is allocated equally among all partners.

Select all that apply: When a new partner is admitted to a partnership as a result of a cash transaction between individual parties, A) the new partner's admission has no impact on partnership tangible assets and liabilities. B) the cash payment made by the new partner to existing partners must form the basis for the new partnership valuation. C) the transfer of ownership may be recorded by a capital reclassification from the current partners to the new partner. D) a revaluation of existing partnership assets is required.

A) the new partner's admission has no impact on partnership tangible assets and liabilities. C) the transfer of ownership may be recorded by a capital reclassification from the current partners to the new partner.

Select all that apply: Included in rights that a partner can convey in a transfer of ownership are A) the rights to share in the profits and losses of the partnership. B) the right of co-ownership of the partnership business property. C) the unconditional right to participate in the management of the business. D) the right to participate in the management of the business if agreed upon by by all other partners.

A) the rights to share in the profits and losses of the partnership. B) the right of co-ownership of the partnership business property. D) the right to participate in the management of the business if agreed upon by by all other partners.

Select all that apply: As compared to corporations, disadvantages of the partnership business form include A) unlimited personal liability of the individual partners for their proportional share of partnership debts. B) unlimited personal liability of the individual partners for all partnership debts. C) mutual agency that limits the risk of the individual partners for overall partnership debts. D) mutual agency where individual partners can incur liabilities in the name of the partnership in the normal course of business.

B) unlimited personal liability of the individual partners for all partnership debts. D) mutual agency where individual partners can incur liabilities in the name of the partnership in the normal course of business.

In the Goldman, King, and Wilson textbook example where Goldman is admitted to the partnership with a 20% interest in exchange for a $20,000 cash investment in the partnership, under the bonus method A) No partner receives a bonus. B) All partners (Goldman, King, and Wilson) receive a bonus. C) Goldman pays a bonus to King and Wilson. D) Goldman receives a bonus from King and Wilson.

D) Goldman receives a bonus from King and Wilson.

Select all that apply: Partnership capital contributions often include A) cash. B) loans to the partnership. C) intangible asset contributions. D) tangible asset contributions.

A) cash. C) intangible asset contributions. D) tangible asset contributions.

The hybrid method gets its name from the fact that it contains elements of both the goodwill (revaluation) method and the __________ method.

bonus

Because a Subchapter S corporation pays no income taxes, but passes its income through to the tax returns of the individual owners, it avoids __________ taxation of its income.

double

Fill in the blank: Corporations pay income taxes. Additionally their owners also often pay taxes when the corporation's income is paid as dividends. In contrast, because partnership income is passed though to the individual partners tax returns, the partnership is said to avoid __________ taxation of the profit earned by the business.

double

Similar to initial partner contributions to begin a partnership, subsequent partner contributions to support ongoing operations or expansion should be credited to the contributing partner's capital account at __________ value.

fair

A partner brings valuable website design talent to a partnership. The partnership records goodwill to recognize this talent, and the contributing partner receives an additional capital credit. To account for the contribution of talent, the partnership has employed the __________ method.

goodwill

If Partner B's profit and loss ratio is different than her percentage of partnership capital, then the amount paid to Partner B upon withdrawal does not determine the implied value of the entire __________ .

partnership

Select all that apply: In accounting for a partner withdrawal from a partnership, the goodwill (revaluation method) credits A) each partners' capital account for their share of recognized goodwill. B) each partners' capital account for their share of asset revaluations. C) only the remaining partners' capital accounts for their proportionate share of asset revaluations. D) only the remaining partners' capital accounts for their proportionate share of recognized goodwill.

A) each partners' capital account for their share of recognized goodwill. B) each partners' capital account for their share of asset revaluations.

Select all that apply: Individual C is admitted with a 30% interest to the AB partnership in exchange for $50,000 cash paid to partners A and B. Why might C receive a capital credit for less that the $50,000 cash payment? A) The ownership transfer was recorded by reclassifying partial capital balances to A without any asset revaluation. B) The partnership employed a book value approach where each partner transferred 30% of their interest to C. C) Because only $50,000 was directly contributed to the partnership entity. D) The $50,000 was paid to the current partners, not the partnership.

A) The ownership transfer was recorded by reclassifying partial capital balances to A without any asset revaluation. B) The partnership employed a book value approach where each partner transferred 30% of their interest to C. D) The $50,000 was paid to the current partners, not the partnership.