a.

Admission by Investment
- Investing something value to the partnership

An incoming partner may acquire an interest in the partnership based on:

 No bonus ( absence of revaluation) or no revaluation (goodwill) approach;
 Bonus ( absence of revaluation) approach; and
 Revaluation (goodwill) approach.

Case 1: No Bonus or No Revaluation

Case 2: Bonus to New Partner
Case 3: Revaluation (Goodwill) to New Partner
Case 4: Bonus to Old Partners
Case 5: Revaluation (Goodwill) to Old Partners
Case 6: Bonus and Revaluation (Goodwill) to New Partner
Case 7: Bonus and Revaluation to Old Partners
Case 8: Revaluation (Goodwill) to New and Old Partners
Case 9: Bonus to Old Partners with Bonus Amount Given
Case 10: Bonus to new partner with an indication of bonus
Case 11: Revaluation (Goodwill) to Old partners with an Indication of a
revaluation (Goodwill)
Case 12: Revaluation (Goodwill) to new partner with revaluation amount given
Case 13: Withdrawals instead of revaluation
Case 14: Bonus and revaluation (Goodwill) when not specifically stated
Assumption 1: Revaluation (Goodwill) or Bonus to New partner
Alternative 1: Bonus Approach
Alternative 2: Revaluation (Goodwill) Approach
Assumption 2: Revaluation (Goodwill) or Bonus to Old partners
Alternative 1: Bonus approach
Alternative 2: Revaluation (Goodwill) Approach

1. Withdrawal/ Retirement of a Partner

It is assumed that the partners mutually agree to the retirement such that:
 The retiring partner may elect to sell his interest to an outside party
 The retiring partner may elect to sell his interest to one or more of the
remaining partners; or

 The partners may mutually agree to transfer partnership assets (payment

from partnership funds) to the retiring partner for his interest in the firm.
Settlement may either be:
 Payment in cash
 Transfer on non- cash assets; and
 Recognition of liability for the full or balance of the unpaid total
interest of the retiring partner.
 Case 1: Payment at Book Value (Settlement price is equal to the interest of
retiring partner).
Case 2: Payment at More than Book Value (Settlement price is greater than the
interest of retiring partner)
Assumption 1: Bonus to Retiring Partner
Assumption 2: Partial Revaluation (Goodwill) to retiring partner
Assumption 3: Total Revaluation (Goodwill) to retiring partner
Case 3: Payment at less than book value (settlement price is less than the
interest of retiring partner)
Assumption 1: Bonus to remaining partners
Assumption 2: Partial revaluation/write-down of specific assets (share of
retiring partner)
Assumption 3: Total revaluation/write-down of assets (entire entity)

2. Death of a partner

- Dissolves the partnership

- In the absence of specific provisions to the contrary, profit and loss
should be summarized, the partnership assets should be appraised,
and the descendant’s interest in the partnership should be established
as of the date of death.

3. Incorporation of the Partnership

- Partners may decide to incorporate in order to secure the advantages

in the corporate form of organization.
- When a charter is granted recognizing a corporation, the corporation
will act to acquire the net assets of the partnership for its shares of
stock.