When a new partner purchases the entire interest of an old partner, the new partner's capital account should be credited for the amount he or she paid to the old partner.

Question

Quizplus · Accepted Answer

The transaction of a new partner purchasing the interest of an old partner is a private transaction between those two individuals and does not affect the partnership's books. The capital account of the new partner is credited based on the amount agreed upon for the purchase of the partnership interest, which is usually determined by the partnership agreement or a separate agreement between the partners, not necessarily the amount paid to the old partner.

When a New Partner Purchases the Entire Interest of an Old