PARTNERSHIP DISSOLUTION MODIFIED TRUE OR FALSE. Write True if the statement is correct. Otherwise, explain why it is wrong. 1. Partnership dissolution is always followed by partnership liquidation. 2. If the partnership is dissolved with the death of one of the partners, the remaining partners may continue the partnership under a new partnership name. The partnership may be dissolved by mere agreement among partners. Partnership liquidation is always preceded by partnership dissolution. The admission of a new partner brings about a new association of persons even if the partnership is not liquidated. 6. The admission of new partner either by purchase of existing partner's interest or by investment of new assets in the partnership will result to an increase in the total partnership's assets. 7. Admission of a new partner by investment under the bonus method will result to a condition where the total contributed capital s more than the total agreed capital. 8. When the capital of a retiring partner is to be bought by the partnership, this will result to a decrease in the total partnership's asset even if his interest is to be retired at an amount lower than its book value. 9. If the partnership is dissolved because of insolvency, all the general partners must contribute the additional amount to fully pay the third party creditors. 10. The personal creditors of the general partner have a better claim to the partner's personal assets than the creditors of the partnership. 11. A partnership has a limited life. Any change in the relationship of the partners dissolves it. 12. Total contributed capital, which is the sum of the capital balances of the old partners and the actual investment of the new partner, should always be equal to the new partnership capital. 13. When a partner withdraws from a partnership, an appraisal of all partnership assets needs to be made. 14. Bankruptcy of a partner will dissolve the partnership. 15. It is possible to invest cash and non-cash assets into a partnership yet be given a zero starting capital balance. 16. A partnership is both easy to form and dissolve. 17. Ownership can be easily transferred in a partnership. 18. When a newly admitted partner gives a bonus to the existing partners, the old partner's capital account is debited to record such bonus. 19. Partner Y purchases Partner Z's P 180,000 interest from Partner Z for P300,000, The entry to record the transaction would use P300,000. 20. When a new partner is given 25% ownership in a partnership, he will receive 25% of all future profits and losses. 21. When a partner withdraws assets larger than his capital balancer the excess is treated as a bonus to the remaining partners. 22. Capital credit is the equity of a partner in the new partnership and can be computed by multiplying the total agreed capitalization by the corresponding percentage interest of the partner. 23. When the old partners give a bonus to a newly admitted partner, the existing partner's accounts are debited. 24. When a newly admitted partner gives a bonus to the existing partners, the old partner's capital account is debited. 25. Bonus to a new partner is always given by the old partners. 26. In admission by investment, bonus method is used when the total agreed capital is more than the total contributed capital. 27. When Ted purchases Barney's P48,000 capital interest for P48,000, the resulting entry would be a debit to Cash for P48,000. 28. In admission by purchase, payment is personally made to the partner from whom the interest is obtained. 29. If the agreed capital exceeded the total contributed capital, the difference may be attributed to a positive asset revaluation. 30. Death of a partnership creditor dissolves a partnership. 31. There will be no impact on the partnership's income statement if the partners withdraw from the business. 32. The admission of a new partner in an existing partnership dissolves it. 33. When a partner withdraws from a partnership, there is no need for asset reappraisal. 34. The assets invested into the partnership and not directly paid to the individual partners increase the total assets of the partnership. 35. A partnership dissolution will not always lead to a partnership liquidation. 36. During partnership dissolution, the partnership is not terminated but continues until the winding up of partnership affairs is completed
