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:

ROI

Return on Investment; a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of multiple investments.

Combined Turnover

The sum total of sales or revenues generated by different segments, departments, or subsidiaries of a company within a specified period.

Investment Opportunity

An option available to individuals or companies to invest capital with the expectation of generating a return.

Residual Income

The profit earned after deducting the cost of capital from the net operating income.