When a partnership is formed, equity dictates that assets contributed to the partnership be recorded in the general ledger at their

• adjusted tax basis

• fair value

• replacement value

• book value

The partnership form of business is

• an economic entity

• a separate legal entity, just as a corporation is a legal entity

• a taxable entity

• a fiscal entity

A unique feature of partnership as compared to publicly owned corporation) is that

• they do not have to follow GAAP

• they are not governed by laws

• books have to be maintained on the tax basis

• they do not file income tax returns

A partnership is formed by two individual who were previously sole proprietor. Property other than cash that is part of the initial investment in the partnership would be recorded for financial reporting purposes at the

• proprietor's book values or the fair value of the property at the date of the investment whichever is higher

• proprietor's book values or the fair value of the property at the date of the investment whichever is lower

• proprietor's book value at the property at the date of the investment

• fair value of the property at the date of investment

The disadvantage of the partnership form of business organization, compared to corporation, include

• the legal requirements for formation

• unlimited liability for the partners

• the requirement of the partnership to pay income taxes

• the extent of government regulation

Under the bonus method, any increase or decrease in the capital credit of a partner is

• deducted from or added the capital of the other partners

• recognized as goodwill

• recognized as expense

• deferred and amortized to profit or loss

Under the bonus method, the asset contributed by a partner receiving a bonus is

• debited at an amount greater than the asset's fair value

• debited at an amount less than the asset's fair value

• debited an amount equal to the asset's fair value

• none of the above

On July 1, ML & PP formed a partnership, agreeing to share profits and losses in the ratio of 4:6, respectively, ML contributed a parcel of land that cost her Php 25,000. PP contributed Php 50,000 cash. The land was sold for Php 50,000 on July 1, four hours after formation of the partnership. How much should be recorded in ML's capital account on the partnership formation?

Max, Ike, and Tony are forming a partnership. The appraised value of assets contributed is Php 60,000; Php 80,000, and Php 100,000.00, respectively. In addition, Max and Tony agree that Ike experience is worth Php 30,000. The partners desire to apply the bonus method where applicable. What is the total capital recorded at the date the partnership is formed?

WW & MM drafted a partnership agreement that lists the following assets contributed at the partnership's formation: WW - Cash Php 20,000 & Furniture and Equipment Php 15,000; while MM - Cash Php 30,000, Inventory Php 15,000 & Building Php 40,000. The building is subject to a Php 10,000 mortgage, which the partnership has assumed. The partnership agreement also specifies that profits and losses are to be distributed evenly. What should be recorded as capital for WW & MM at the formation of the partnership?

• WW Php 35,000; MM Php 85,000

• WW Php 35,000; MM Php 75,000

• WW Php 55,000; MM Php 55,000

• WW Php 60,000; MM 60,000