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7. If A is the total capital of the partnership before admission of a new partner,...

7. If A is the total capital of the partnership before admission of a new partner, B is the total capital of the partnership after the investment of a new partner, C is the amount of the new partner’s investment, and D is the amount of capital credit to the new partner, then there is:

a. A bonus to the new partner if B = A + C and D < C.

b. A bonus to the old partner if B = A + C and D > C.

c. Both a and b are correct

d. Both a and b are incorrect.

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Answer #1

Option (d) is correct. Both a and b are incorrect. The answer will be: a bonus to the new partner if B = A + C and D > C.

Option (a) is incorrect. A bonus to the new partner is not possible if D < C.

Option (b) is incorrect. Since, D is the amount of capital credit to the new partner, then there is a bonus to the new partner, not the old partner.

Option (c) is incorrect. Both the options a and b are not correct.

Answer is d. Both a and b are incorrect.

Please up vote. Thanks!

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