Answered: newly formed partnership handles the…

newly formed partnership handles the contribution of previously depreciated assets by continuing the depreciation life as if the owner had not changed.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 10MC: How does a newly formed partnership handle the contribution of previously depreciated assets? A....

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Question

newly formed partnership handles the contribution of previously depreciated assets by continuing the depreciation life as if the owner had not changed. Select one: O a. False Ob. True

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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Any assets invested by a particular partner in a partnership ________. A. do not become a partnership asset but instead remain with the partner B. can be used only by the investing partner C. become the property of all the partners D. are the basis for all profit sharing
When 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 partners
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 partners
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?
Under the goodwill method, a. declines in asset values prior to new partner admission are recorded, but not asset appreciation. b. the total capital of the new partnership must approximate the fair value of the entity. c. a new partner’s capital balance may be less than his or her contribution. d. All of the above.
An incoming partner may acquire an interest in the partnership for a price in excess of that indicated by the book value of the original partnership’s net assets. This situation would suggest the existence of: a. Unrecognized Goodwill b. Recognized Profit c. Unrecognized capital d. Unrecognized excess of cash
If an existing partner withdraws from a partnership which is true a. his or her interest may be sold to the partnership or an individual partner. b. the consideration received for that partner's interest may suggest the existence of undervalued existing assets and/or goodwill. c. either the bonus or the goodwill method may be used to record the transaction if the partnership acquires the withdrawing partner's interest. d. all of the above
Which of the following is the reason to not revalue partnership assets at the date a new partner is admitted to the partnership? Group of answer choices A. All three are reasons to not revalue partnership assets at the date of new partner’s admission B. The partnership has not ceased operations C. There has been a change in the ownership D. A new legal entity exists
When a partner invests noncash assets in a partnership, the assets should be recorded at their: a) Book value. b) Market value c) Carrying value. d) Original cost.