In admitting a new partner who purchases an interest, the capital interest of the new partner is obtained from the current partners and both the total assets and total capital are increased.

Question

Quizplus · Accepted Answer

When a new partner purchases an interest directly from existing partners, the capital interest of the new partner is indeed obtained from the current partners, but the total capital of the partnership increases only if the new partner contributes more than the book value of the purchased interest. The total assets of the partnership increase only if the new partner contributes assets to the partnership, not when purchasing an interest from existing partners.

In Admitting a New Partner Who Purchases an Interest, the Capital