-Refer to the above information.Which statement below is correct if goodwill of the old partners is recognized upon the contribution of assets into the partnership by a new partner?

Question

-Refer to the above information.Which statement below is correct if goodwill of the old partners is recognized upon the contribution of assets into the partnership by a new partner? A)B = A and D < C + A B)B = A and D > C + A C)B < A and D = C + A D)B > A and D < C + A

Quizplus · Accepted Answer

B = A and D > C + AWhen goodwill of the old partners is recognized upon the contribution of assets into the partnership by a new partner, it increases the capital accounts of the old partners without changing the total capital contributed by the new partner. Therefore, the total capital of the partnership (B) remains equal to the sum of the original capital (A) and the capital contributed by the new partner (C), but the distribution of capital among partners changes, making the value of the old partners' capital accounts (D) greater than the sum of their original capital (A) and the new partner's contribution (C).

-Refer to the Above Information