Does a New Partner in a Firm Have Personal Liability

question 26

Essay

Does a new partner in a firm have personal liability for debts existing when he joined the firm? What should a prospective partner do to avoid unreasonable liability?

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Definitions:

Pension Expense

The cost recognized by an employer for maintaining a defined benefit pension plan for its employees over a given period.

Pension Funding

The process of setting aside financial resources to cover future pension benefits for employees.

Cumulative Gain

The total amount of profit earned over a period of time, adding together successive gains from operations or investments.

Corridor Threshold

A term used in pension accounting that refers to the allowable range in fluctuation in the value of pension assets or liabilities; amounts outside this corridor may require amortization to keep the pension's accounting measures stable.