An incoming partner may acquire an interest in the partnership for a price in excess of that indicated by the book value of the original partnership's net assets.This situation would suggest the existence of:

Question

Quizplus · Accepted Answer

The situation described indicates that the incoming partner is paying more than the book value of the partnership's net assets, which suggests the presence of intangible value that is not reflected in the recorded financial statements. This intangible value is known as goodwill, and it represents the reputation, customer loyalty, and other non-tangible assets that contribute to the partnership's profitability. Therefore, the correct choice is C) Unrecognized Goodwill.

An Incoming Partner May Acquire an Interest in the Partnership