P, L, and O Are Partners with Capital Balances of $50,000

question 18

Multiple Choice

P, L, and O are partners with capital balances of $50,000, $30,000 and $20,000 and who share in the profit and loss of the PLO partnership 30%, 20%, and 50%, respectively, when they agree to admit C for a 20% interest.If C contributes $40,000 to the partnership and the goodwill method is used, what amount will be debited for goodwill?

• A) $15,000
• B) $20,000
• C) $25,000
• D) $28,000
• E) $60,000

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Definitions:

Aristotle

An ancient Greek philosopher and polymath, whose work spans various fields of philosophy and science, and is considered one of the greatest philosophers in history.

Virtue Ethics

An approach to ethics that emphasizes the character of the moral agent, rather than rules or consequences, as the key element of ethical thinking.

Dishonesty

The act of being untruthful or practicing deception, especially with the intention of gaining an unfair advantage.

Flourishing Life

A rephrased definition for Human Flourishing: Living a life marked by vitality, purpose, and a deep sense of well-being.