When the current value of a partnership is greater than the recorded amounts of equity, the current partners usually require any new partner to pay a bonus for the privilege of joining.

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This is known as a goodwill payment, which is made when the value of the business exceeds the book value of the equity. The existing partners are entitled to demand a bonus payment from any new partners who wish to join the business, as they have contributed to the increase in value of the partnership.

When the Current Value of a Partnership Is Greater Than