When a new partner is admitted to a partnership, a. a bonus is not recorded b. a bonus may be attributable to the old partner c. a bonus may only result from more cash being given by the new partner than the value of the assets being purchased d. 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

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Business

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23 October, 12:34

When a new partner is admitted to a partnership, a. a bonus is not recorded b. a bonus may be attributable to the old partner c. a bonus may only result from more cash being given by the new partner than the value of the assets being purchased d. 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

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Karlie Brooks · Answer 1

The correct answer is B, a bonus may be attributable to the old partner.

Explanation:

Joining an existing business is more easier than starting a fresh one, hence choosing to join an established business that has likely broke even and now in profit territory must be paid for in some way.

From the foregoing analysis, the old partners might be unwilling to admit a new one except that the new one is ready to pay a premium over the book value of assets acquired in the business in compensation for the existing partners' efforts since commencement of business.