Exercise 3 - Exercise 3 1 REVIEW QUESTIONS 1 Partnership...

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Exercise 3 – 1. REVIEW QUESTIONS 1. Partnership dissolution is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying out of the business. Also, it is the termination of the life of an existing partnership. 2. Causes of Partnership Dissolution a. Admission of a new partner b. Retirement or withdrawal of a partner c. Death, incapacity or insolvency of a partner d. Incorporation of a partnership 3. Types of Admission by a New Partner a. By purchase of interest from one or more of the old partners The transaction is a personal one between one or more existing partners and the new partner. Any money or other consideration exchanged is the property of the participants and not the property of the partnership. Each partner’s capital account is debited for the ownership claims that have been relinquished, and the new partner’s capital account is credited with the capital equity purchased.
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