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| LO5 – Account for the admission or withdrawal of partners from a partnership. |
The admission of a new partner results in the creation of a new partnership. Although the business of the former partnership can continue, the former partnership ceases to exist. Since the liability, agency, and profit sharing arrangements may be altered, a new partnership agreement is required.
Assume the following balance sheet information.
New partner C wants to enter the A and B partnership. C can be admitted either by purchasing an existing partner’s interest or by contributing assets to the partnership.
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