When a New Partner Is Admitted into a Partnership and the Capital

question 57

Multiple Choice

When a new partner is admitted into a partnership and the capital of the old partners decreases,which of the following explains the reason for the decrease?
I.Undervalued liabilities were written up to their fair values.
II.Undervalued assets were written up to their fair values.

• A)I only
• B)II only
• C)Both I and II
• D)Neither I nor II

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