When a New Person Is Admitted into a Partnership by Investing

question 43

Multiple Choice

When a new person is admitted into a partnership by investing assets in the partnership at book value, the new person:

• A)pays cash directly to the existing partners in amounts equal to their respective capital balances.
• B)transfers assets to the partnership which are equal in value to the existing partners' capital balances (no bonus).
• C)pays cash directly to existing partners based on the market value of the partnership's assets.
• D)transfers assets to the partnership which are equal in value to the market value of the partnership's assets.

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