FAR 2.8 - Partnerships

Question 1

The three method to account for formation of partnership are:

Answer 1

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

Question 2

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

Answer 2

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

Question 3

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

Answer 3

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

Question 4

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

Answer 4

Their remaining profit and loss ratios

Question 5

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

Answer 5

Profit and loss ratios