Advanced Accounting 12th Edition by Joe Ben Hoyle,Thomas Schaefer , Timothy Doupnik

Exercise 32

Pat, Jean Lou, and Diane are partners with capital balances of $50,000, $30,000, and $20,000, respectively. These three partners share profits and losses equally. For an investment of $50,000 cash (paid to the business), MaryAnn will be admitted as a partner with a one-fourth interest in capital and profits. Based on this information, which of the following best justifies the amount of Mary Ann's investment
A) MaryAnn will receive a bonus from the other partners upon her admission to the partnership.
B) Assets of the partnership were overvalued immediately prior to MaryAnn's investment.
C) The book value of the partnership's net assets was less than the fair value immediately prior to MaryAnn's investment.
D) MaryAnn is apparently bringing goodwill into the partnership, and her capital account will be credited for the appropriate amount.