Asked by Alexis Shyanne on Jun 24, 2024
Verified
Brian and Sandy are forming a partnership. Brian will invest a truck with a book value of $10000 and a fair value of $14000. Sandy will invest a building with a book value of $30000 and a fair value of $42000 with a mortgage of $15000. What amount should be recorded in Brian's capital account?
A) $30000
B) $27000
C) $42000
D) $14000
Book Value
The net value of a company's assets as recorded on its balance sheet, subtracting liabilities from total assets.
Fair Value
The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Mortgage
A loan used to purchase property, where the property itself serves as collateral until the loan is paid off.
- Comprehend the treatment and valuation of various forms of initial investments into a partnership, including cash, equipment, buildings, accounts receivable, and property with associated mortgages or accumulated depreciation.
Verified Answer
AM
Alissa M. LosetoJun 25, 2024
Final Answer :
D
Explanation :
Brian's capital account should be credited with the fair value of the truck he is investing, which is $14,000.
Learning Objectives
- Comprehend the treatment and valuation of various forms of initial investments into a partnership, including cash, equipment, buildings, accounts receivable, and property with associated mortgages or accumulated depreciation.