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    When partnership is formed, assets contributed by partners should be recorded on partnership books at their...

    A) book values on the partner's books prior to their contributing to the partnership. B) fair market value at the time of the contribution. C) original costs to the partner contributing them. D) assessed values for property purposes. Which 1 is right???
    a few seconds ago 2 Answers

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    The best answer is B, but not for tax purposes. B is the correct answer in order to be fair to the partners. Let's say that A and B form a partnership and A contributes $100,000 and B contributes land and building which she bought for $60,000 and on which $10,000 of depreciation has been recorded. B's cost is $60,000, her book value of the property is $50,000, but the fair value of the property is $100,000. If the partnership accepts the property at its fair value, A and B will have equal shares of the partnership. If they record it at B's book value, B would contribute assets with a fair value of $100,000 but would wind up with only 1/3 ownership of the partnership. That would be unfair to B because it would transfer part of the fair value of the asset to A. However, the partnership would have to continue depreciating the original cost of the property for tax purposes.
    a few seconds ago

    Other Answers

    • The right answer would be A, that is, assets contributed by partner should be recorded at net realizable values or net book value. the acquisition costs less acc. depreciation represents the Net Book Value of the Assets. However, upon agreement of partners, assets contributed can be recorded at fair market value or its assessed values after the same is evaluated by an independent qualified appraisers.

      by KRISTOFF - an hour ago

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