Which one of the following alternatives is incorrect? O a. The selling price of the partnership business is determined by the value of its assets. b. When recording the valuation adjustments, if the value a a liability is decreased, the valuation account credited with the amount of a decrease. O c. An existing goodwill account balance is transferred to the partners' capital accounts on admission of a new partner. O d. The change in the ownership structure of the partnership is effectively the same as the dissolution. e. To ensure that compliance is followed, the financial statements of partnerships must be prepared according to IFRS.

Which one of the following alternatives is incorrect? O a. The selling price of the partnership business is determined by the value of its assets. b. When recording the valuation adjustments, if the value a a liability is decreased, the valuation account credited with the amount of a decrease. O c. An existing goodwill account balance is transferred to the partners' capital accounts on admission of a new partner. O d. The change in the ownership structure of the partnership is effectively the same as the dissolution. e. To ensure that compliance is followed, the financial statements of partnerships must be prepared according to IFRS.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 10MC: How does a newly formed partnership handle the contribution of previously depreciated assets? A....

See similar textbooks

Similar questions

How does a newly formed partnership handle the contribution of previously depreciated assets? A. continues the depreciation life as if the owner had not changed B. starts over, using the contributed value as the new cost basis C. shortens the useful life of the asset per the partnership agreement D. does not depreciate the contributed asset
When a partnership dissolves, the first step in the dissolution process is to ________. A. allocate the gain or loss on sale based on income sharing ratio B. pay off liabilities C. sell noncash assets D. divide the remaining cash among the partners
When a partnership is liquidated, any gains or losses realized by the sale of noncash assets are allocated to the partners based on their income sharing ratio. Why?
Which of the following is a disadvantage of the partnership form of organization? A. limited life B. no taxation at the partnership level C. flexibility in business operations D. combining of financial resources
When a partnership dissolves, the last step in the dissolution process is to ________. A. allocate the gain or loss on sale based on income sharing ratio B. pay off liabilities C. sell noncash assets D. divide the remaining cash among the partners
If an existing partner withdraws from a partnership which is true a. his or her interest may be sold to the partnership or an individual partner. b. the consideration received for that partner's interest may suggest the existence of undervalued existing assets and/or goodwill. c. either the bonus or the goodwill method may be used to record the transaction if the partnership acquires the withdrawing partner's interest. d. all of the above
In accounting for a withdrawal by payment from partnership assets, which statement is FALSE? O The withdrawing partner may be paid using non-cash assets. O Net assets will decrease O Total capital will decrease. O Asset revaluations should bx recorded.
Which of the following statements is correct when a new partner is admitted to an existing partnership by purchasing a portion of a capital interest of an existing partner? a. The partnership will recognize gain or loss in the transfer of capital from one partner to another partner. b.The partnership is not dissolved by the admission of a new partner by purchase. c.It will result to revaluation or impairment of existing assets of the partnership. d. It will just result to credit to capital of newly admitted partner with corresponding debit to capital of the selling partner
QUESTION 2 Which one of the following alternatives is correct? A. To ensure that compliance is followed, the financial statements of partnerships must be prepared according to IFRS. B. When recording the valuation adjustments, if the value of a liability is decreased, the valuation account credited with the amount of a decrease. C. The selling price of the partnership business is determined by the value of its assets. D. An existing goodwill account balance is transferred to the partners' capital accounts on admission of a new partner. E. The fair value of the assets of a partnership is equal to the total equity of a partnership.
Which of the following statements is correct when a new product is admitted to an existing partnership by purchasing a portion of a capital interest of an existing partner? A. The partnership will recognize gain or loss in the transfer of capital from one partner to another partner. B. It will result to revaluation or impairment of existing assets of the partnership C. It will just result to credit to capital of newly admitted partner with corresponding debit to capital of the selling partner D. The partnership is not dissolved by the admission of a new partner by purchase
Under the goodwill method, a. declines in asset values prior to new partner admission are recorded, but not asset appreciation. b. the total capital of the new partnership must approximate the fair value of the entity. c. a new partner’s capital balance may be less than his or her contribution. d. All of the above.
When a new partner is admitted into the partnership by investment, the following take place except O Total assets and total partners' equity will decrease, unlike admission by purchase of interest. O Investment of non-cash assets must be recorded at current or fair market value. O. It is a transaction between the partnership and the incoming partner O. It involves the investment of assets by new partner into the partnership