1. Which of the following is true about the goodwill method of accounting for the admission of a partner?

a, Both of these statements are correct.

b, It allows recording goodwill for the original partners or the new incoming partner.

c, It is influenced by the entity theory of the partnership.

d, None of these statements is correct.

2. Which of the following is true about the schedule of safe payments prepared in installment liquidations?

a, The schedule allocates a cash payment to the partner with the highest maximum loss absorbable before the other partners.

b, Only one schedule needs to be prepared throughout the liquidation process.

c, The schedule assumes that when partners have deficit capital balances, their personal assets will only cover a portion, but not all, of their deficits.

d, The schedule assumes that remaining non-cash assets can be sold at book value.

3. When the parent lends the subsidiary and accepts a note for the debt ________.

a, All of these statements are correct.

b, The interest revenue and interest expense recorded in the two companies' individual bookswill always be reported on the consolidated financial statements.

c, When the parent discounts the note at a non-affiliated bank, only the interest revenue on thenote will be reported on the consolidated financial statements, while the interest expense willbe eliminated.

d, The interest revenue and interest expense recorded in the two companies' individual bookswill not be eliminated in their income distribution schedules.

Use the following information for the next FIVE items

The following facts were available about the XY Partnership on January 1 2021

		Percentage Interestin
ExistingPartners	CapitalBalance	Capita	Profit
X	$70,000	35%	25%
Y	130,000	65	75

On that date, Partner Z was admitted and acquired a 30 percent interest in thepartnership capital and profit and losses. Answer the following independentcases about the admission of Partner Z.

4. Assume that Partner Z transferred to the partnership assets with a fair value of$81,000. How would the admission of Partner Z be recorded if the partners agreed touse the bonus method?

a, None of these.

b, Debit Assets $81,000, Debit X's Capital $2,750, Debit Y's Capital $8,250, Credit Z's Capital81,000, Credit Land $11,000

c, Debit Assets $81,000, Credit Z's Capital 81,000.

d, Debit Assets $81,000, Debit X's Capital $825, Debit Y's Capital $2,475, Credit Z's Capital$84,300.

5. Assume that Partner Z invested $104,551 in cash to join the partnership. What wouldbe the increase in Partner X's capital under the bonus method? (Round to the nearestdollar).

6. Assume that Partner Z transferred to the partnership assets with a fair value of$81,000. How would the admission of Partner Z be recorded if the partners agreed torevalue the XY Partnership's land?

a, Debit Assets $81,000, Credit Z's Capital 81,000.

b, Debit Assets $81,000, Debit X's Capital $825, Debit Y's Capital $2,475, Credit Z's Capital$84,300.

c, Debit Assets $81,000, Debit X's Capital $2,750, Debit Y's Capital $8,250, Credit Z's Capital81,000, Credit Land $11,000

d, None of these.

7. Assume that Partner Z transferred to the Partnership assets with a fair value of$96,776. What would be the amount of goodwill traceable to the original partners Xand Y? (Round to the nearest dollar).

8. Assume that the assets of the X&Y partnership had a fair value of $168,000. Whatwould be the amount of goodwill traceable to Partner Z if she transfers to thepartnership assets with a fair value of $34,505? (Round to the nearest dollar)

9. Which of the following is an example of the influence of the proprietary theory onpartnership characteristics?

a, Partnerships do NOT pay a "partnership income tax". Rather, partnership income is allocatedto the individual partners who pay individual income taxes.

b, Both of these.

c, None of these.

d, Partners' salaries are considered a distribution of profits

10, Which of the following is true about the bonus method of accounting for the admissionor the withdrawal of a partner?

a, The bonus method allows recording asset appreciation but not asset write-down.

b, Compared to the goodwill method, the bonus method is more consistent with GAAP.

c, None of these statements is correct.

d, The bonus is calculated as the difference between the fair value and book value of thepartnership.