Nathan Long Is Entering into a Partnership with Terri

question 17

Multiple Choice

Nathan Long is entering into a partnership with Terri.Nathan is investing $2,000 cash and equipment currently on Nathan's books at $6,000 and accumulated depreciation of $1,000.The equipment has a fair market value of $4,000.The entry to record Nathan's investment should include be to:

• A)debit Cash $2,000; debit Equipment $6,000; credit Accumulated Depreciation $1,000; credit Long,Capital $7,000.
• B)debit Cash $2,000; debit Equipment $6,000; credit Accumulated Depreciation $2,000; credit Long,Capital $6,000.
• C)debit Long,Capital $6,000; debit Accumulated Depreciation $2,000; credit Cash $2,000; credit Equipment $6,000.
• D)debit Cash $2,000; debit Equipment $4,000; credit Long,Capital $6,000.

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Definitions:

Outstanding Shares

The total number of shares of a corporation's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares.

Equity Method

An accounting technique used to record investments in other companies when significant influence is held but not complete control.

Revenue from Stock Investments

Income earned from the ownership of shares in other companies, including dividends received and gains from sales of these shares.

Investee

A company or entity in which an investor holds a minority stake, not sufficient to exercise control over it.