pat, jean lou, and diane are partners with capital balances of $50,000, $30,000, and $20,000 respectively. these three partners share profits and losses of equally. for an investment of $50,000 cash (paid to the business), mary ann will be admitted as a partner with a 1/4 interest in capital and profits. based on this information, which of the following best justifies the amount of mary ann' investment? a. mary ann will receive a bonus from the other partners upon her admission to the partnership b. assets of the partnership were overvalued immediately prior to mary ann's investment c. the book value of the partnership's net assets was less than the fair value immediately prior to mary ann's investment d. mary ann is apparently bringing goodwill into the partnership, and her capital account will be credited for the appropriate amount

pat, jean lou, and diane are partners with capital balances of $50,000, $30,000, and $20,000 respectively. these three partners share profits and losses of equally. for an investment of $50,000 cash (paid to the business), mary ann will be admitted as a partner with a 1/4 interest in capital and profits. based on this information, which of the following best justifies the amount of mary ann' investment? a. mary ann will receive a bonus from the other partners upon her admission to the partnership b. assets of the partnership were overvalued immediately prior to mary ann's investment c. the book value of the partnership's net assets was less than the fair value immediately prior to mary ann's investment d. mary ann is apparently bringing goodwill into the partnership, and her capital account will be credited for the appropriate amount

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 2PA: Arun and Margot want to admit Tammy as a third partner for their partnership. Their capital balances...

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Choose the correct. Pat, Jean Lou, and Diane are partners with capital balances of $50,000, $30,000, and $20,000, respectively. These three partners share profits and losses equally. For an investment of $50,000 cash (paid to the business), MaryAnn will be admitted as a partner with a one-fourth interest in capital and profits. Based on this information, which of the following best justifies the amount of MaryAnn’s investment?a. MaryAnn will receive a bonus from the other partners upon her admission to the partnership.b. Assets of the partnership were overvalued immediately prior to MaryAnn’s investment.c. The book value of the partnership’s net assets was less than the fair value immediately prior to MaryAnn’s investment.d. MaryAnn is apparently bringing goodwill into the partnership, and her capital account will be credited for the appropriate amount.
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