Carson and Lamb establish a partnership to operate a used-furniture business under the name C & L Furniture. Carson contributes furniture that cost P60,000 and has a fair value of P90,000. Lamb contributes P30,000 cash and delivery equipment that cost P40,000 and has a fair value of P30,000. The partners agree to share profits and losses 60% to Carson and 40% to Lamb. Calculate the peso inequity that will result if the initial contributions of the partners are recorded at cost rather than fair market value. a. 10,000 b. 18,000 c. 20,000 d. 30,000
Carson and Lamb establish a partnership to operate a used-furniture business under the name C & L Furniture. Carson contributes furniture that cost P60,000 and has a fair value of P90,000. Lamb contributes P30,000 cash and delivery equipment that cost P40,000 and has a fair value of P30,000. The partners agree to share profits and losses 60% to Carson and 40% to Lamb. Calculate the peso inequity that will result if the initial contributions of the partners are recorded at cost rather than fair market value. a. 10,000 b. 18,000 c. 20,000 d. 30,000
Chapter11: Partnerships: Distributions, Transfer Of Interests, And Terminations
Section: Chapter Questions
Problem 31P
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Carson and Lamb establish a partnership to operate a used-furniture business under the name C & L Furniture. Carson contributes furniture that cost P60,000 and has a fair value of P90,000. Lamb contributes P30,000 cash and delivery equipment that cost P40,000 and has a fair value of P30,000. The partners agree to share profits and losses 60% to Carson and 40% to Lamb. Calculate the peso inequity that will result if the initial contributions of the partners are recorded at cost rather than fair market value.
a. 10,000
b. 18,000
c. 20,000
d. 30,000
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