Assets of the partnership

Reference no: EM133036

Question :

Jean Lou, Pat, and Diane are partners with capital balances of $50,000, $20,000, and $30,000 correspondingly. These three partners share profits and losses equally. For an investment of $50,000 cash(paid to the business), MaryAnn will be admitted as a partner with a one-fourth interest in capital and profits. Based on this information, which of the following best justifies the amount of MaryAnn's investment?

a. MaryAnn will get a bonus from the other partners upon her admission to the partnership.

b. Assets of the partnership were overvalued instantly prior to MaryAnn's investment.

c. The book value of the partnership's total assets was less than the fair value instantly prior to MaryAnn's investment.

d. MaryAnn is apparently starting goodwill into the partnership, and her capital account may be credited for the appropriate amount.

Reference no: EM133036

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