The Accounting Review Vol. 37 No. 4 1962
DETERMINATION OF GOODWILL AND BONUS ON THE ADMISSION OF A PARTNER.
Abstract
It is a common belief that accounting for the admission of a partner is relatively simple, but that it is one of the more difficult areas to teach. According to the author this paradox appears to be a result of a lack of delineation as to what is a problem in accounting theory and what is a problem in arithmetic. The article presents problems of this nature, divided into three basic formulae. the formulae are applicable only when the goodwill or bonus is implied by the statement of the problem. The formulae provided are for bonus problems, goodwill and asset revaluation problems and allocation of goodwill, bonus or asset increment. The kernel of the bonus problem is to determine the capital credit to the incoming partner. The essence of the goodwill problem is to determine the total capital of the ex-ante partnership. The author remarks that in some problems the data are not presented in exactly the same terms as that employed in the formulae. This should present no problem if the formulae are well understood.
- DOI
- 10.2308/tar-7100511
- Volume
- 37
- Issue
- 4
- Pages
- 766-768
- Language
- en
- Sources
- openalex crossref