When a New Partner Is Admitted to a Partnership

question 141

Multiple Choice

When a new partner is admitted to a partnership,

• A) a bonus may be attributable to the old partner
• B) a bonus may only result from more cash being given by the new partner than the value of the assets being purchased
• C) a bonus agreed upon by the partners is recorded as an asset so long as the amount is within the range set by the SEC
• D) a bonus is not recorded

Grasp the initial value method and its applications in accounting for investments in subsidiaries.

Calculate consolidated noncurrent assets and understand allocation of excess consideration in acquisitions.

Recognize accounting treatment for multiple acquisitions and changes in ownership percentages.

Understand consolidation procedures for subsidiaries acquired during the fiscal year.

---

Definitions:

Straight-Line Depreciation

A method of calculating depreciation by evenly spreading the cost of an asset minus its salvage value over its useful life.

Capital Budgeting

The process of evaluating and selecting long-term investments that are expected to yield benefits over several years, such as purchasing new machinery or expanding facilities.

Incremental Sales

The additional sales generated by a new marketing strategy, product launch, or any other business initiative.

Operating Expenses

Expenses that a business incurs through its normal business operations, such as sales and marketing, research, and development costs.