Just like Accounts Receivable being recorded at gross with the Allowance for Doubtful Accounts in the new set of partnership books, Depreciable assets are also recorded at gross with the Accumulated Depreciation in the new set of partnership books. O True
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- When a partnership dissolves, the last step in the dissolution process is to ________. A. allocate the gain or loss on sale based on income sharing ratio B. pay off liabilities C. sell noncash assets D. divide the remaining cash among the partnersWhen a partnership dissolves, the first step in the dissolution process is to ________. A. allocate the gain or loss on sale based on income sharing ratio B. pay off liabilities C. sell noncash assets D. divide the remaining cash among the partnersHow does a newly formed partnership handle the contribution of previously depreciated assets? A. continues the depreciation life as if the owner had not changed B. starts over, using the contributed value as the new cost basis C. shortens the useful life of the asset per the partnership agreement D. does not depreciate the contributed asset
- When a partnership is liquidated, any gains or losses realized by the sale of noncash assets are allocated to the partners based on their income sharing ratio. Why?What is the first step in a partnership liquidation (termination and sale of assets)?Which of the following would not be recorded in the entry for the formation of a partnership? Group of answer choices Accumulated depreciation Allowance for doubtful accounts Accounts receivable All of these would be recorded
- no need to explain: The following transactions will affect the balance of the total partnership capital except a. retirement of a partner by paying an amount equal to his interest b. the partnership incurred net loss for the year c. admission by purchase with bonus d. permanent retirement by partners Upon dissolution, the partners may adjust the partnership assets and liabilities. The net effect of such restatement must be distributed to the partners based on their a. ending capital balances b. old profit and loss ratio c. new profit and loss ratio d. beginning capital balancesIn a partnership liquidation, if a partner has a debit capital balance in his or her capital account, he or she is responsible for contributing personal assets sufficient to eliminate the deficit. Group of answer choices True FalseWhich of the following statements is FALSE? A. A basis adjustment under 734(b) attributable to a partnership distribution is designed to protect the partners who did not receive the distribution from recognizing built-in gains that belong to the distributee partner. B. In order to determine the correct tax result for payments to a deceased or retired partner, one must first determine the retiring/deceased partner's share of the fair market value of partnership assets. Unrealized receivables are not considered an "asset" for this purpose if capital is not material income producing factor (such as a law firm). C. Payments to a retiring partner that compensate the partner for his share of the fair market value of partnership property are treated as guaranteed payments. D. All of the above statements are TRUE
- What is the proper disposition of a partnership loan that was made from a partner who has a debit balance in the capital account? A. The loan is ignored in liquidation. B. The loan is offset against the debit balance in the capital account. C. The loan is charged off to the capital accounts of all the partners in their profit and loss sharing ratios. D. The loan is held for payment after all other capital accounts are covered.In the liquidation of a limited liability partnership, a loan payable to a partner by the partnership is: a. Considered to be the same as the partner's capital account b. Paid before all outside creditors have been paid in full c. Considered to be zero. d. Used to absorb the partner's share of losses on realization of assets1. In a partnership liquidation the realization losses result in a debit balance in one partners’ capital account. If this partner fails to contribute personal assets to make up this deficit, how should the debit balance be handled by the partners? a. It should be written off against partnership profits like any other bad debt. b. It should be allocated to all the partners in their profit and loss ratio. c. It should be allocated to the remaining partners in their remaining P and L ratio. d. It should be set up as a receivable and turned over to a collection agency. 2. During liquidation, a partners’ capital account balance drops below zero. What should happen? a. The other partners should file a legal suit against the partner with the deficit balance. b. The partner with the highest capital balance should contribute sufficient assets to eliminate the deficit. c. The deficit balance…