If the partnership business is particularly successful and profitable, the existing partners may require the new partner to pay them a bonus as an admission requirement. Assume that C invests assets at their fair value of $13,000 in the partnership for a one-third ownership interest. The new total capital amounts to $33,000 ($10,000 + 10,000 + 13,000); of this amount, $11,000 ($33,000 x 1/3) belongs to C.
The bonus to existing partners is recorded as follows:
The $13,000 invested by C results in only an $11,000 capital balance for C. A and B receive a $1,000 increase in each of their capital balances as a result of C’s $13,000 investment in the partnership.
The partnership balance sheet, following the recording of C’s investment, would appear as follows:
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