When a New Partner Is Admitted to a Partnership Under

question 12

Multiple Choice

When a new partner is admitted to a partnership under the goodwill method, an original partner's capital account may be adjusted for

• A)a proportionate share of the incoming partner's investment.
• B)his or her share of previously unrecorded intangible assets traceable to the original partners.
• C)his or her share of previously unrecorded intangible assets traceable to the incoming partner.
• D)none of the above.

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Definitions:

Capital Goods

Long-lasting goods acquired or manufactured by a business that are used in the production of other goods or services, rather than being sold to consumers.

Opportunity Cost

The expense incurred by not selecting the second-best choice available when deciding between multiple options.

Consumer Goods

Products and services that are purchased for consumption by the average household or end user, rather than for the purpose of resale or further processing.

Capital Goods

Are tangible assets such as buildings, machinery, equipment, vehicles, and tools that an organization uses to produce goods or services.