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3 cards from this section. Quick, good the night before a test.
What is one primary reason a partnership might admit a new partner?
Think about what businesses need to grow.
Define goodwill in the context of partnerships.
Consider how reputation affects customer loyalty.
What is a primary reason for admitting a new partner in a partnership?
Think about what businesses require for growth.
True or False: Goodwill is a tangible asset.
Consider how goodwill differs from physical items.
A partnership with partners A, B, and C has profits of $150,000. They decide to admit partner D who contributes $50,000. How will the profit-sharing ratio change if D is given a 25% stake?
Calculate how much of the profit each partner will take after D is admitted.
If partner E is admitted into a partnership for a capital contribution of $30,000, with existing partners A, B, and C originally having shares of 40%, 35%, and 25%, respectively. How would the sacrificing ratio be calculated?
Start by determining what new percentage E should have and see how it affects the others.
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