Mr.and Ms.Smith's Partnership Owns the Following Assets

question 25

Multiple Choice

Mr.and Ms.Smith's partnership owns the following assets:
* Potential § 1245 recapture of $30,000.

** Straight-line depreciation was used.
mr.and Ms.Smith each have a basis for their partnership interest of $135,000. Calculate their combined recognized gain or loss and classify it as capital or ordinary if they sell their partnership interests for $470,000.

• A)$200,000 ordinary income.
• B)$200,000 capital gain.
• C)$100,000 ordinary income and $100,000 capital gain.
• D)$90,000 ordinary income and $110,000 capital gain.
• E)None of the above.

Understand and apply flexible budgeting, especially in the context of direct labor and manufacturing overhead costs.

Differentiate between financial and non-financial measures of performance.

Analyze performance reports, particularly the significance of budget variances.

Comprehend the relationship between responsibility accounting, controllable margins, and performance evaluation.

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Definitions:

Equity Earnings

The proportion of earnings attributed to a parent company from its investment in subsidiaries or associates, recognized in its income statement.

Investment

The distribution of assets like money or time with the hope of earning revenue or gains.

Cost Method

An accounting approach used to measure the value of an investment, based on the cost to acquire it, minus any impairments.

Unamortized Acquisitional Fair Value Adjustments

The portion of the adjustments to the fair values of acquired assets and liabilities through an acquisition that has yet to be amortized over their useful life.