Under general circumstances, debt is allocated from the partnership to each partner in the following manner:
A)recourse-profit-sharing ratios; nonrecourse-profit-sharing ratios.
B)recourse-capital ratios; nonrecourse-capital ratios.
C)recourse-to partners with the ultimate responsibility for paying the debt; nonrecourse-profit-sharing ratios.
D)recourse-profit-sharing ratios; nonrecourse-to partners with the ultimate responsibility for paying the debt.

Question

Quizplus · Accepted Answer

Recourse debt is allocated to the partners who have the ultimate responsibility for paying the debt, reflecting their legal or agreed-upon obligations. Nonrecourse debt, which is not the personal responsibility of any partner, is typically allocated according to the partners' profit-sharing ratios, as it reflects the economic risk borne by the partners.

Under General Circumstances, Debt Is Allocated from the Partnership to Each