Scenario 14-2 Assume That a Partnership Had Assets with a Book Value

question 48

Multiple Choice

Scenario 14-2
Assume that a partnership had assets with a book value of $240,000 and a market value of $195,000, outside liabilities of $70,000, loans payable to partner Able of $20,000, and capital balances for partners Able, Baker, and Chapman of $70,000, $30,000, and $50,000.
-Refer to Scenario 14-2. How would the first $100,000 of available assets be distributed assuming profits and losses are allocated equally?

• A) $70,000 to outside liabilities, $20,000 to Able, and the balance equally among the partners
• B) $70,000 to outside liabilities and $30,000 to Able
• C) $70,000 to outside liabilities, $25,000 to Able, and $5,000 to Chapman
• D) $40,000 to Able, $20,000 to Chapman, and the balance equally among the partners

---

Definitions:

Empirical Arguments

Arguments based on observed and recorded evidence.

Replicate

To duplicate or reproduce an experiment, study, or procedure to verify its results.

Empirical Investigation

A research method that relies on direct or indirect observation and experience to gather knowledge or conclusions.

Independent Verification

The process of having a third party check and confirm the accuracy or validity of findings or data to ensure objectivity and reliability.