A Partnership's Records Show D's Basis in Her 25% Interest in This Partnership Is

question 16

Multiple Choice

A partnership's records show: $\begin{array}{ll}&\text { Inside Basis }&FMV\\\text { Cash }&\$ 4,000 & \$ 4,000 \\\text { Inventory }&16,000 & 30,000 \\\text { Land }&8,000 & 20,000\\\text { Equipment }&72,000&60,000\\\text { Total assets }&\$100,000&\$114,000\end{array}$ D's basis in her 25% interest in this partnership is $26,000.She receives 25 percent of all partnership assets as a liquidating distribution.Compute D's basis in each distributed asset.

• A)Inventory $4,000, land $2,000, and equipment $18,000
• B)Inventory $4,000, land $5,000, and equipment $16,000
• C)Inventory $4,000, land $3,000, and equipment $18,000
• D)Inventory $4,500, land $2,250, and equipment $19,250
• E)None of the above

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Definitions:

Adjusting Entry

An accounting journal entry made to amend the preliminary financial records before preparing financial statements.

Manufacturing Overhead

Indirect costs related to manufacturing, including utilities, rent for manufacturing facilities, and equipment maintenance, not directly tied to individual units produced.

Overapplication of Overhead

A situation where the allocated overhead costs exceed the actual overhead costs incurred.

Machine Hours

Machine hours denote the total amount of time a machine is operated within a specific period, used for costing and operational efficiency measures.