When a partnership is worth more than the amounts recorded, an incoming partner may:
A) be required to pay a bonus to the other partners.
B) pay a smaller amount as an initial investment.
C) have to pay the same as other partners.
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

When a partnership is valued higher than the amounts recorded in the accounting books, an incoming partner may be required to pay a bonus to the existing partners. This bonus reflects the premium for joining a partnership that has a higher intrinsic value than what is reflected by its recorded capital.

When a Partnership Is Worth More Than the Amounts Recorded