What is one characteristic of the goodwill method when a new partner invests additional capital?

The characteristic of the goodwill method when a new partner invests additional capital is that goodwill is recognized by the total value implied by the new partner's contribution. This method reflects the idea that when a new partner comes into the partnership, their investment may carry a value that exceeds the net assets of the partnership. As such, the excess value represents goodwill, which is recognized and allocated among the existing partners based on their existing equity in the partnership.

In practice, this means that the new partner's contribution establishes an implied valuation for the entire partnership. For example, if the new partner invests a sum that suggests a higher overall value for the partnership than what is reflected on its balance sheet, that difference is recognized as goodwill. This approach helps in accurately reflecting the worth of the partnership and recognizes the contribution of the new partner beyond just the tangible assets.

This understanding is crucial in partnership accounting as it ensures that all partners share in the economic benefit that arises from the goodwill associated with the partnership.