A partner who withdraws his interest at book value receives assets

Self Test Chapter 3Multiple Choice Theories1. If existing partners acquire the equity of a withdrawing partner, in what manner do they divide theequity?a. In any manner they choose

A partner who withdraws his interest at book value receives assets

Self Test Chapter 3Multiple Choice Theories1. If existing partners acquire the equity of a withdrawing partner, in what manner do they divide theequity?a. In any manner they chooseb. Equallyc. Proportionate to their residual profit and loss ratiosd. Existing partners are not permitted to acquire the equity of a withdrawing partner2. Which of the following must exist to create the potential for a retiring partner to have a bonusrecognized at the date of withdrawal?a. The retiring partner must be paid more than the book value of his equityb. The existing partners must decide to not admit a new partner to the partnershipc. The retiring partners equity must be acquired by the partnershipd. All of the above are necessary for a bonus to be recognized3. In what manner do the remaining partners share in the bonus paid to a withdrawing partner?a. In proportion to their residual profit and loss ratiosb. Equallyc. In proportion to their capital account balancesd. The partner with the greatest capital account is assigned the bonus4. Which of the following statements is true with regard to a withdrawing partner?a. A bonus must be paid to the retiring partnerb. A bonus may be paid to the retiring partnerc. A bonus must be paid to the retiring partner or to the remaining partnersd. Recognizing a bonus is not appropriate when a partner retires5. What change occurs to continuing partners capital accounts when a withdrawing partner isassigned goodwill at the date of withdrawal?a. Continuing partners capital accounts decease by their profit and loss ratio proportion of thegoodwill assigned to the withdrawing partnerb. Continuing partners capital accounts increasec. Continuing partners capital accounts do not changed. Goodwill cannot be recognized with regard to withdrawing partners6. What amount of goodwill can be recognized at the date a partner withdraws from a partnership?a. The withdrawing partners portion of goodwillb. The continuing partners portion of goodwillc. Goodwill may not be recognized at the date a partner withdrawsd. Either the withdrawing partners portion of goodwill or the goodwill attributable to the entirepartnership7. What portion of the partnerships assets must be revalued when a partner withdraws from thepartnership?a. The withdrawing partners share must be revaluedb. All of the partnerships assets must be revaluedc. Any or all of the partnerships assets may be revalued but none have to be revaluedd. Partnership assets may not be revalued when a partner withdraws8. If existing partners acquire the equity of a withdrawing partner, in what manner do they divide theequity?a. In any manner they chooseb. Equallyc. Proportionate to their residual profit and loss ratiosd. Existing partners are not permitted to acquire the equity of a withdrawing partner9. Which of the following must exist to create the potential for a retiring partner to have a bonusrecognized at the date of withdrawal?a. The retiring partner must be paid more than the book value of his equityb. The existing partners must decide to not admit a new partner to the partnershipc. The retiring partners equity must be acquired by the partnershipd. All of the above are necessary for a bonus to be recognizedProblems1. Kern and Pate are partners with capital balances of P60,000 and P20,000, respectively.Profits and losses are divided in the ratio of 60:40. Kern and Pate decide to admit Grant,who invested land valued at P15,000 for a 20% capital interest in the partnership.Grants capital account should be credited for:

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