Small Corp

question 3

Multiple Choice

Small Corp. and Big Corp. are equal partners in Medium Enterprises. The total partnership has a net worth of $210,000, split 50/50 between the two corporations. Size Co. has been asked to join the partnership. When the transaction is complete, all three partners will have an equal interest. To accomplish this structural change, Size Co. will contribute $105,000 to the partnership treasury. This transaction will

• A) increase the original partners' interests.
• B) dilute the original partners' interests.
• C) result in a capital gain for the partners.
• D) result in a capital loss for the partners.

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Definitions:

Support Departments

Units within an organization that provide essential services or support to the core operational departments but do not directly contribute to revenue.

Projected Long-Run Needs

Anticipated requirements of a business over an extended period, which influence operational and strategic planning.

Capital Budget

A budget for major capital, or investment, expenditures that are used to acquire or upgrade physical assets such as property and equipment.

Dual Cost Allocation

A method in cost accounting that assigns costs to products or services based on both direct and indirect cost factors.