B is corrent. The capital balance at the day of the partnership formation is the sum of the fair values of the assets contributed. Dale’s capital balance is $290,000 (cash of $70,000, machinery and equipment of $75,000, and net value of building of $145,000). Note that the net value of the building contributed to the partnership is the $225,000 less the existing mortgage of $80,000.
A is incorrect. The capital balance at the day of the partnership formation is the sum of the fair values of the assets contributed. Dale’s capital balance is $290,000 (cash of $70,000, machinery and equipment of $75,000, and net value of building of $145,000). Note that the net value of the building contributed to the partnership is the $225,000 less the existing mortgage of $80,000.
C is incorrect. The capital balance at the day of the partnership formation is the sum of the fair values of the assets contributed. Dale’s capital balance is $290,000 (cash of $70,000, machinery and equipment of $75,000, and net value of building of $145,000). Note that the net value of the building contributed to the partnership is the $225,000 less the existing mortgage of $80,000.
D is incorrect. The capital balance at the day of the partnership formation is the sum of the fair values of the assets contributed. Dale’s capital balance is $290,000 (cash of $70,000, machinery and equipment of $75,000, and net value of building of $145,000). Note that the net value of the building contributed to the partnership is the $225,000 less the existing mortgage of $80,000.
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