FAR 2.8 - Partnerships Flashcards

1
Q

The three method to account for formation of partnership are:

A
  1. Exact method
  2. Bonus method
  3. Goodwill method
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2
Q

Under the bonus method, the bonus will be credited to the existing partners when:

A

The new partner pays more than the NBV of the capital account purchased

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3
Q

Under the bonus method, the bonus will be credited to the new partner when:

A

The new partner pays less than the NBV of the capital account purchased

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4
Q

Under the bonus method of withdrawal from a partnership, the bonus is allocated to remaining partner’s capital accounts in accordance with :

A

Their remaining profit and loss ratios

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5
Q

Under the goodwill withdrawal method, the amount of the implied goodwill is allocated to all of the partners based on their:

A

Profit and loss ratios

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