Chapter 14

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

Goodwill

Under the hybrid method of accounting for a partner's withdrawal from a partnership

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

Accounting for a partnership's owners' equity tends to be much less complex than for a corporation because

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

Typically included in an articles of partnership agreement are

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

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?

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

Included in rights that a partner can convey in a transfer of ownership are

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

When a new partner is admitted to a partnership as a result of a cash transaction between individual parties,

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

Compared to a corporation's balance sheet, the owners' equity section of a partnership

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