Partnership Flashcards
1
Q
how are capital accounts measured?
A
fair value of assets contributed
2
Q
bonus method
A
In the bonus method, bonuses are are used to adjust the old and new partners’ capital accounts and do not affect the carrying value of partnership assets
when one partner receives more than the balance in their partnership account upon retiring, the difference is a bonus from the other partners and reduces their capital balances according to their new profit and loss percentages.
Under the bonus method, no goodwill or any other unidentifiable asset is recorded.
