Asked by Wendy Reynoso on Jul 04, 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. At what amount should the building be recorded?
A) $30000
B) $27000
C) $42000
D) $45000
Fair Value
An estimated market value of an asset or liability based on current market prices or valuations of similar instruments.
Mortgage
A loan secured by real property, typically paid back with interest over a long period, used by individuals and businesses to purchase real estate.
- Familiarize oneself with the procedure and valuation of assorted initial assets introduced into a partnership, namely cash, machinery, buildings, accounts receivable, and property associated with mortgages or built-up depreciation.
Verified Answer
MK
Mirjana KristoJul 08, 2024
Final Answer :
C
Explanation :
The building should be recorded at its fair value of $42000, as investments in a partnership are recorded at fair value at the time of investment.
Learning Objectives
- Familiarize oneself with the procedure and valuation of assorted initial assets introduced into a partnership, namely cash, machinery, buildings, accounts receivable, and property associated with mortgages or built-up depreciation.