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The document discusses partnership accounting for asset contributions and the bonus method. It states that asset contributions are initially measured at fair value (1). It describes a situation where Mr. I contributed equipment worth P2M but was credited P2.2M in his capital account, and says the P2M excess would be treated as a bonus to Mr. M (2). It explains that under the bonus method, increases or decreases in a partner's capital credit are added or deducted from other partners' capital credits (3). Finally, it notes that under the bonus method, the asset of a partner receiving a bonus is debited at an amount greater than fair value (4).

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Arian Amurao
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4K views2 pages

77

The document discusses partnership accounting for asset contributions and the bonus method. It states that asset contributions are initially measured at fair value (1). It describes a situation where Mr. I contributed equipment worth P2M but was credited P2.2M in his capital account, and says the P2M excess would be treated as a bonus to Mr. M (2). It explains that under the bonus method, increases or decreases in a partner's capital credit are added or deducted from other partners' capital credits (3). Finally, it notes that under the bonus method, the asset of a partner receiving a bonus is debited at an amount greater than fair value (4).

Uploaded by

Arian Amurao
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

The asset contributions of partners to a partnership are initially measured at


a. fair value.
b. original cost to the partner.
c. tax basis.
d. any of these

2. Mr. I and Mr. M formed a partnership business. Mr. I contributed equipment with fair
value of P2M. However, the partners agreed that Mr. I's capital account should be credited
for P2.2M. Which of th1. The asset contributions of partners to a partnership are initially
measured at
a. fair value.
b. original cost to the partner.
c. tax basis.
d. any of these

2. Mr. I and Mr. M formed a partnership business. Mr. I contributed equipment with fair
value of P2M. However, the partners agreed that Mr. I's capital account should be credited
for P2.2M. Which of the following statements is correct?
a. The P.2M excess credit is treated as a bonus to Mr. M.
b. Mr. M is probably bringing in expertise or special skill to the business.
C Mr. M's capital account will be debited for P.2M.
d. This is unacceptable. Mr. I's capital credit should be P2M.

3. Under the bonus method, any increase or decrease in the capital credit of a partner is
a. deducted from or added to the capital credits of the other partners.
b. recognized as goodwill,
c. recognized as expense.
d. deferred and amortized to profit or loss.

4. Under the bonus method, the asset contributed by a partner receiving a bonus is
a. debited at an amount greater than the asset's fair value.
b. debited at an amount less than the asset's fair value.
c. debited at an amount equal to the asset’s fair value
d. either a or b

e following statements is correct?


a. 1. The asset contributions of partners to a partnership are initially measured at
a. fair value.
b. original cost to the partner.
c. tax basis.
d. any of these

2. Mr. I and Mr. M formed a partnership business. Mr. I contributed equipment with fair
value of P2M. However, the partners agreed that Mr. I's capital account should be credited
for P2.2M. Which of the following statements is correct?
a. The P.2M excess credit is treated as a bonus to Mr. M.
b. Mr. M is probably bringing in expertise or special skill to the business.
C Mr. M's capital account will be debited for P.2M.
d. This is unacceptable. Mr. I's capital credit should be P2M.

3. Under the bonus method, any increase or decrease in the capital credit of a partner is
a. deducted from or added to the capital credits of the other partners.
b. recognized as goodwill,
c. recognized as expense.
d. deferred and amortized to profit or loss.

4. Under the bonus method, the asset contributed by a partner receiving a bonus is
a. debited at an amount greater than the asset's fair value.
b. debited at an amount less than the asset's fair value.
c. debited at an amount equal to the asset’s fair value
d. either a or b

The P.2M excess credit is treated as a bonus to Mr. M.


b. Mr. M is probably bringing in expertise or special skill to the business.
C Mr. M's capital account will be debited for P.2M.
d. This is unacceptable. Mr. I's capital credit should be P2M.

3. Under the bonus method, any increase or decrease in the capital credit of a partner is
a. deducted from or added to the capital credits of the other partners.
b. recognized as goodwill,
c. recognized as expense.
d. deferred and amortized to profit or loss.

4. Under the bonus method, the asset contributed by a partner receiving a bonus is
a. debited at an amount greater than the asset's fair value.
b. debited at an amount less than the asset's fair value.
c. debited at an amount equal to the asset’s fair value
d. either a or b

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