A partnership admits a new partner. The new partner invests $75,000 in the business and receives a credit of $90,000 to his capital account. The difference of $15,000 is called a(n):
A) admission fee.
B) partnership expense.
C) bonus.
D) illegal activity.

Question

Quizplus · Accepted Answer

The difference of $15,000 is called a bonus, which is an amount paid to the new partner for the privilege of joining the partnership, reflecting the value of the existing goodwill or the expectation of future profits.

A Partnership Admits a New Partner