Allen retired from the partnership of Allen, Beck and Chale. Allen's cash settlement from the partnership was based on new goodwill determined at the date of retirement plus the carrying amount of the other net assets. As a consequence of the settlement, the capital accounts of Beck and Chale were decreased. In accounting for Allen's withdrawal, the partnership could have used the:

ANSWER:

yes - bonus method; no - goodwill method. In accounting for partnership withdrawal, dissolution or admission: The bonus method increases (or decreases) the individual partners accounts without changing total net assets of the partnership. Since the capital accounts of Beck and Chale decreased, goodwill was not recorded as an asset, but instead the bonus paid to Allen was charged against the capital accounts of the remaining partners. The goodwill method increases the individual partners accounts and also changes total net assets of the partnership.

Why isn't it a possibility that the Goodwill method was used? The prompt didn't explicitly state that total net assets were unchanged.