In Which One of the Following Situations Will a Court

question 116

Multiple Choice

In which one of the following situations will a court find that a partnership exists?

• A)Joe sells his business to Harry for $10 000 for the assets and a further $20 000 for goodwill,the goodwill portion to be paid at a rate of 20% of the profits from the business until paid.
• B)Joe is a partner in a shoe store and sells his share of the business to Harry without the consent of his partner.
• C)Joe and Mary promote several dances at school and split the profits.
• D)Joe,a partner in a law firm,dies and Joe's widow takes over Joe's share of the profits.
• E)Joe and Mary,while attending university,purchase a house and share the profits from the rent after deducting expenses.

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Definitions:

Additional Paid-in Capital

The amount of money investors pay above the par value of stocks during an equity financing round; it represents excess capital collected from shareholders.

Common Stock

Common Stock refers to shares representing ownership in a corporation, granting holders voting rights and a share in the company’s profits through dividends.

Contingent Consideration

An obligation of a buyer to transfer additional assets or equity interests to the seller after meeting certain conditions post-acquisition.

Liabilities

Liabilities are financial obligations or debts that a company owes to others, which are expected to be paid in the future.