BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Bonus to a new partner is given by the old partners. If the agreed capital exceed total contributed capital, the difference may be positive asset revaluation. If the capital credit(CC)of the partner is less than his investment(AC), the difference is always recorded as asset revaluation.

Detailed explanation-2: -A bonus to the new partner comes from the old partners. It is a reduction in the capital of the old partners and an increase in the capital of the new partner. The capital account of the new partner is credited and the capital accounts of the old partners are debited according to their profit and loss ratio.

Detailed explanation-3: -A bonus to a new admitted partner decreases (or debits) the capital balances of the old partners. The amount of the decrease depends on the income ratio defined by the old partnership agreement in place before the new partner’s admission.

Detailed explanation-4: -Answer and Explanation: When a new partner is admitted to a partnership a bonus may be attributable to the old partner. This happens when the new partner’s capital credit on the date of admittance is less than the new partner’s investment in the firm.

Detailed explanation-5: -A new partner is entitled to be a part of the future profits of the firm upon being added to the firm. The act of admitting new partner also leads to the reduction in the future profit sharing ratio of the existing partners.