Which of the following statements describes the situation in which a new person pays a bonus to buy into a partnership?
A)The new person pays a greater amount into the partnership than his or her proportionate share of the total capital.
B)The new partner pays in to the partnership an amount that is less than his or her proportionate share of the total capital.
C)The new person pays certain amounts directly to the existing partners in addition to his or her payment to the partnership.
D)The new partner pays in an amount equal to the average capital balances of the existing partners.

Question

Quizplus · Accepted Answer

When a new person pays a bonus to buy into a partnership, they pay a greater amount into the partnership than their proportionate share of the total capital. This is because the existing partners are compensated for the goodwill of the partnership, which is represented by the bonus payment.

Which of the Following Statements Describes the Situation in Which