Danny and Vicky Are Forming a Partnership

question 94

Multiple Choice

Danny and Vicky are forming a partnership. Danny will invest a truck with a book value of $10,000 and a fair market value of $14,000. Vicky will invest a building with a book value of $30,000 and a fair market value of $42,000 with a mortgage of $15,000. What amount should be recorded in Vicky's capital account?

• A) $30,000
• B) $27,000
• C) $42,000
• D) $14,000

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Definitions:

Price of The Stock

The current market value at which a single share of a company's stock can be bought or sold.

Market Rate of Return

The average returns earned by investors in the market as a whole, often considered as the benchmark return.

Annual Dividend

The yearly sum paid by a company to its shareholders out of its earnings.

Market Price

The ongoing market rate for assets or services being bought or sold.