When a New Person Purchases the Partnership Interest of an Existing

question 15

Multiple Choice

When a new person purchases the partnership interest of an existing partner, which of the following is TRUE?

• A)The amount paid for the partnership interest is recorded on the partnership books.
• B)The purchase price is determined by the balance in the existing partner's capital account.
• C)The partnership will record either a gain or a loss if the amount paid is higher or lower than the existing partner's capital account balance.
• D)The newly admitted partner will assume the same capital balance of the old partner regardless of the amount paid.

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Definitions:

Marriage Acknowledgement Agreement

A marriage acknowledgement agreement is a formal declaration or contract recognizing the terms, conditions, or changes in a marital relationship, often related to financial matters or personal commitments.

Marriage Consideration Agreement

Also known as a prenuptial agreement, it is a contract entered into before marriage outlining the division of assets and financial arrangements upon divorce.

Anti-assignment Clause

A provision in a contract that prevents one party from transferring their rights or obligations under the contract to another party without the original party's consent.

Assignment

The conveyance of rights, assets, or duties from one individual to another.