FAR 2.8 - Partnerships Flashcards
1
Q
The three method to account for formation of partnership are:
A
- Exact method
- Bonus method
- Goodwill method
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
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
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
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