Question

A= The amount of tangible assets contributed by the new partner into the partnership

B= The amount of capital credited to the new partner
C= Total Capital of the partnership before the admission of a new partner
D= Total capital of the partnership after the admission of the new partner

Refer to the above information. Which statement below is correct if a new partner purchases an interest in capital directly from the old partners?
A. C < D
B. C = D
C. C = D and B = A
D. C < D and B = A

Answer 1

B. C = D

Step-by-step explanation:

C= Total Capital of the partnership before the admission of a new partner

D= Total capital of the partnership after the admission of the new partner

The purchase occurs outside the partnership (but with the partners approvals)

The partnership will only credit the new partner and debit the seller partner by the amount they agree on.

The partnership received no assets and therefore his capital remains at same value.