Under the Bonus Method, When a New Partner Is Admitted

question 7

Multiple Choice

Under the bonus method, when a new partner is admitted to the partnership, the total capital of the new partnership is equal to:

• A)the book value of the previous partnership plus the fair market value of the consideration paid to the existing partnership by the incoming partner
• B)the book value of the previous partnership plus any necessary asset write ups from book value to market value plus the fair market value of the consideration paid to the existing partnership by the incoming partner
• C)the book value of the previous partnership minus any asset write downs from book to market value plus the fair market value of the consideration paid to the existing partnership by the incoming partner
• D)the fair market value of the new partnership as implied by the value of the incoming partner's consideration in exchange for an ownership percentage in the new partnership

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Definitions:

Trieb

A German term used by Freud, often translated as "drive" or "instinct", referring to the internal forces that motivate behavior.

Motivating Forces

The internal or external factors that stimulate desire and energy in people to be continually interested and committed to a job, role, or subject, or to make an effort to attain a goal.

Sex Act

Physical activities involving sexual intercourse or other forms of sexual expression between individuals.

Paradoxical

Characterized by seemingly contradictory qualities that may nevertheless be true when observed from different perspectives.