Nathan Invests $2,000 for 10% Interest in a Partnership That

question 54

Multiple Choice

Nathan invests $2,000 for 10% interest in a partnership that has total capital of $15,000 after admitting Nathan.Which of the following is true?

• A)Nathan's capital is $2,000.
• B)The original partners received a bonus of $500.
• C)Nathan received a bonus of $500.
• D)The original partners' capital in the business was $13,500 before admitting Nathan.

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Definitions:

Goodwill Impairment

The decrease in the value of a company’s goodwill, which occurs when the market value of the entity is less than its recorded value on the balance sheet.

Fair Value Adjustment

An accounting process to adjust the book value of an asset or liability to reflect its current market value.

Equity Method

A method in accounting for logging investments where the investor holds considerable sway over the entity being invested in, yet lacks full control.

Acquisition Differential

The difference between the purchase price of a company and the net fair value of its identifiable assets and liabilities.