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Acctg301 PartnershipFormationAssignAnsKey
Acctg301 PartnershipFormationAssignAnsKey
a. Fair value
b. Cost
c. Discretionary amount determined by partners
d. Any of these
If a partner’s capital balance is created for an amount greater than or less than the fair value of his net
contribution, the excess or deficiency is called a
a. Bonus
b. Goodwill
c. Discount
d. Premium
Under the bonus method, any increase or decrease in the capital credit of a partner
Under the bonus method, the asset contribution of the partner receiving the bonus is
a. Debited at an amount greater than the fair value of the asset contributed.
b. Debited at an amount lesser than the fair value of the asset contributed.
c. Debited at an amount equal to the fair value of the asset contributed.
d. Either a or b
A and B agreed to form a partnership. A contributed cash of P100,000 while B contributed cash of
P200,000. The partnership agreement stipulates that A and B will have equal interest on the initial
capital of the partnership and in subsequent partnership profits and losses.
a. The contractual agreement is unfair because A’s contribution is way below the agreed interest
of A in the partnership. Therefore, the contractual agreement is void.
b. The capital balances of the partners after the partnership formation are P100,000 and P200,000,
respectively. Any adjustment on the partners’ capital balances to reflect the effects of the
contractual stipulations shall not be made through the partnership books.
c. A and B shall have capital balances of P150,000 each after the partnership formation.
d. The partnership formation will result to a debit to an unidentifiable asset call “good wheel”.
A shall contribute noncash assets with carrying amount of P60,000 and fair value of P100,000.
B shall contribute cash of P200,000
A and B shall have interests of 80% and 20%, respectively, on both the initial partnership capital
and in subsequent partnership profits and losses.
No outside cash settlements shall be made between and among the partners.
a. 300,000
b. 260,000
c. 360,000
d. 420,000
a. 100,000
b. 200,000
c. 60,000
d. None of these
A B C
Cash 50,000 40,000 140,000
Equipment 150,000
Totals 50,000 190,000 140,000
Additional information:
Although C has contributed the most cash to the partnership, he did not have the full amount of
P140,000 available and was forced to borrow P40,000. The partners agreed that half of the
amount borrowed shall be assumed by the partnership.
The equipment contributed by B has an unpaid mortgage of P20,000, the repayment of which is
not assumed by the partnership.
The partners agreed to equalize their interest. Cash settlement among the partners are to be
made outside the partnership.
Which partner(s) shall receive cash payment from the other partner(s)?
A and B agreed to form a partnership. The partnership agreement stipulates the following:
A contributed P100,000 cash while B contributed P200,000 cash. Which partner should provide
additional investment (or withdraw part of his investment) in order to bring the partners’ capital credits
equal to their respective interests in the equity of the partnership?
On July 1, 20X3, Monuz and Pardo form a partnership, agreeing to share profits and losses in the ratio of
4:6, respectively. Monuz contributed a parcel of land that cost him P25,000. Pardo contributed P50,000
cash. The land was sold for P50,000 on July 1, 20X3 four hours after formation of the partnership. How
much should be recorded in Monuz capital account on formation of the partnership?
a. P10,000
b. P20,000
c. P25,000
d. P50,000
The business assets and liabilities of John and Paul appear below:
John Paul
Cash P11,000 P22,354
Accounts receivable 234,536 567,890
Inventories 120,035 260,102
Land 603,000 -
Building - 428,267
Furniture and fixtures 50,345 34,789
Other Assets 2,000 3,600
Total P1,020,916 P1,317,002
John and Paul agreed to form a partnership contributing their respective assets and equities subject to
the following adjustments:
a. Accounts receivable of P20,000 in John’s books and P35,000 in Paul’s are uncollectible.
b. Inventories of P5,500 and P6,700 are worthless in John’s and Paul’s respective book.
c. Other assets of P2,000 and P3,600 in John’s and Paul’s respective books are to be written off.
The capital account of the partners after the adjustments will be:
Red, White and Blue form a partnership on May 1, 20X3. They agree that Red will contribute office
equipment with a total fair value of P40,000; White will contribute delivery equipment with a fair value
of P80,000; and Blue will contribute cash. If Blue wants a one third interest in the capital and profits, he
should contribute cash of:
a. P40,000
b. P120,000
c. P60,000
d. P180,000
Aldo, Bert, and Chris formed a partnership on April 30, with the following assets, measured at their fair
values, contributed by each partner:
Although Chris has contributed the most cash to the partnership, he did not have the full amount of
P30,000 available and was forced to borrow P20,000. The delivery truck contributed by Aldo ha a
mortgage of P90,000 and the partnership is to assume responsibility for the loan. The partners agreed to
equalize their interest. Cash settlement among the partners are to be made outside the partnership.
a. Bert and Chris should pay Aldo, P4,600 and P20,700 respectively.
b. Aldo should pay Bert and Chris, P25,300.
c. Berth should pay Aldo, P25,300 and Chris, P20,700.
d. Chris should pay Aldo, P25,300 and Bert, P4,600.
Cong and Dong have just formed a partnership. Cong contributed cash of P126,000 and computer
equipment that cost P54,000. The computer had been used in his sole proprietorship and had been
depreciated to P24,000. The fair value of the equipment is P36,000. Cong also contributed a note
payable of P12,000 to be assumed by the partnership. Cong is to have 60% interest in the partnership.
Dong contributed only P90,000 cash.
a. P96,000
b. P84,000
c. (P76,800)
d. (P15,000)
On June 1, 20X3, May and Nora formed a partnership. May is to invest assets at fair value which are yet
to be agreed upon. She is t transfer her liabilities and is to contribute sufficient cash to bring her capital
to P210,000 which is 70% of the total capital of the partnership.
Details regarding the book values of May’s business assets and liabilities and their corresponding
valuations are:
Nora agrees to invest cash of P42,000 and merchandise valued at current market price. The value of the
merchandise to be invested by Nora and the cash to be invested by May are: