Answered

Connect with knowledgeable experts and enthusiasts on IDNLearn.com. Our platform provides detailed and accurate responses from experts, helping you navigate any topic with confidence.

Harvey and Quick have decided to form a partnership. Harvey is going to contribute a depreciable asset to the partnership as his equity contribution to the partnership. The following information regarding the asset to be contributed by Harvey is available:
Historical cost of the asset $76,000
Accumulated depreciation on the asset $40,000
Note payable secured by the asset $18,000
Agreed upon market value of the asset
will be assumed by the partnership $45,000
Based on this information. Harvey's beginning equity balance in the partnership will be:______.
a. $76,000.
b. $36,000.
c. $18,000.
d. $27,000.
e. $45,000.

Sagot :

Answer:

d. $27,000.

Explanation:

In the context, it is given that Harley and Quick wants to form a partnership. For this, Harley contributes his depreciable asset as an equity contribution in the partnership.

The amount of market value of the asset that would be assumed by this partnership is = $45,000

The amount of note payable that is secured by the asset  or the debt assumed = $18,000

Therefore, the equity balance in the partnership = market value of asset - the debt assumed by the partnership

                                                                                = 45,000 - 18, 000

                                                                                = 27,000

Hence, the equity balance is $ 27,000 in the partnership.

Thank you for being part of this discussion. Keep exploring, asking questions, and sharing your insights with the community. Together, we can find the best solutions. IDNLearn.com is your reliable source for accurate answers. Thank you for visiting, and we hope to assist you again.