The AB, BC, and CD Partnerships Merge into the ABCD

question 40

Multiple Choice

The AB, BC, and CD Partnerships merge into the ABCD Partnership. AB (owned by Austin and Ben) contributes assets worth $100,000. BC (owned by Ben and Charlie) contributes assets worth $200,000. CD (owned by Charlie and Dennis) contributes assets worth $300,000. The capital and profits interest in ABCD is owned by: Austin, 10%; Ben, 30%; Charlie, 25%; and Dennis, 35%. ABCD Partnership is a continuation of

• A)AB.
• B)BC.
• C)CD.
• D)none of the partnerships.

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Definitions:

Historic Rate

The exchange rate at which a transaction was executed in the past, used for recording foreign currency transactions in financial statements.

Non-Free-Standing Subsidiaries

Entities that are significantly controlled or wholly owned by another firm but lack the independent structure or operations typically associated with subsidiary companies.

Held-to-Maturity Debt Securities

Financial instruments such as bonds that a company intends and is able to hold until they mature, rather than trading them.

Amortized Cost Basis

An accounting method that gradually reduces the cost value of a tangible or intangible asset through periodic amortization charges.