It is possible that an incoming partner may acquire an interest in the partnership at a price less than that indicated by the book value.This situation would suggest the existence of:

Question

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If the incoming partner acquires an interest in the partnership at a price less than book value, it suggests that the recorded net assets of the partnership may have been impaired and their value has decreased below their book value. As a result, the partnership would need to recognize a write-down on the recorded net assets to reflect their decreased value, which offsets the other partners' net worth in the business.

It Is Possible That an Incoming Partner May Acquire an Interest