When a partner invests non cash assets the values of the assets are recorded on the agreed values by the partners?
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Arthik Davianti • Apr. 06, 2015 • 14 likes • 26,688 views
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Partnership accounting Khuram Shahzad 1 of 59 Ad 1 of 59 Ad Apr. 06, 2015 • 14 likes • 26,688 views Download to read offline Business Accounting for formation,operation, and changes in membership of partnerships
Arthik Davianti Follow Faculty Member at Department of Accounting, Faculty of Economics and Business, Satya Wacana Christian University Accounting for formation,operation, and changes in membership of partnerships Business Recommended
When a partner invests non cash assets in a partnership the assets should be recorded at their?When a partner invests noncash assets in a partnership, the assets are recorded at the partner's book value. If nothing is stated, partnership income is divided in proportion to the individual partner's capital balance.
Why the noncash investments of partners should be recorded at their fair values?The recording of noncash assets at less than fair value will result in allocating the amount of understatement between the partners in their relative profit and loss sharing ratios as the undervalued assets are used for partnership business or when they are sold by the partnership.
When a partnership is formed and non cash assets are contributed at which value should these assets be recorded?The assets contributed by the partners should be recorded on the partnership books at their fair market value. Thus, the asset's market value represents its worth, which is part of the individual's contribution to the business.
What valuation should be recorded for noncash assets transferred to a partnership by one of the partners?Noncash assets should be valued at their fair market value on the date they are transferred to the partnership. The assets invested by a partner are debited to the proper asset account, and the total amount is credited to the partner's Capital account. 2-1.
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