Which is true about the computation of average capital

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Reference no: EM132771022

Problem 1: When Mr. B is admitted to the partnership, the fair values of the assets he contributed exceed his initial capital balance. In this case who gets the bonus under the bonus method?

A. Mr. B gets the bonus

B. The old partners get the bonus

C. Both Mr. B and the old partners get the bonus

D. Neither Mr. B nor the old partners get the bonus

Problem 2: Which is true about the computation of average capital of partners?

A. investments increases the average capital

B. investments decreases the average capital

C. drawings increases the weighted average capital

D. the effect of investments and drawings cannot be ascertained

Reference no: EM132771022

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