When a new partner is admitted to a partnership,

A) a bonus may be attributable to the old partner
B) a bonus may only result from more cash being given by the new partner than the value of the assets being purchased
C) a bonus agreed upon by the partners is recorded as an asset so long as the amount is within the range set by the SEC
D) a bonus is not recorded

When a new partner is admitted to a partnership, a bonus may be payable to the old partner. This bonus is often calculated by valuing the partnership's assets and liabilities at their fair market value, and then subtracting the partnership's liabilities from its assets. The resulting figure is the partnership's net assets. If the new partner's contribution exceeds their share of the net assets, a bonus may be payable to the old partner. This bonus is recorded as a debit to the new partner's capital account and a credit to the old partner's capital account.