ILLUSTRATION: FORMATION OF PARTNERSHIP VALUATION OF CAPITAL

A and B formed a partnership. The following are their contributions

A B
Cash 100,000
Accounts Receivable 50,000
Inventory 80,000
Land 50,000
Building 120,000
Total 230,000 170,000

Note payable 60,000

A, Capital 170,000
B, Capital 170,000
total 230,000 170,000

Additional information:
 Included in accounts receivable is an account amounting to 20, 000 which IS
deemed uncollectible 
 The inventory has an estimated selling price of 100,000 and estimated costs
to sell of P10, 000 
 An unpaid mortgage of P10, 000 on the land IS assumed by the partnership. 
 The building is under-depreciated by 25,000. 
 The building also has an unpaid mortgage amounting to 15,000, but the
mortgage is not assumed by the partnership. B agreed to settle the mortgage
using his personal funds. 
 The note payable is stated at face amount. A proper valuation requires the
recognition of a P15, 000 discount on note payable
 A and B shall share in profits and losses 60% and 40% respectively.