When Two Proprietors Decide to Combine Their Businesses and Form

question 44

Multiple Choice

When two proprietors decide to combine their businesses and form a partnership,GAAP usually requires that noncash assets be taken over at their:

• A)residual value on the date of the partnership.
• B)book value on the date of the partnership.
• C)fair market value on the date of the partnership.
• D)historical cost on the date of the partnership.

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Definitions:

Business Transactions

Financial or commercial activities that involve the exchange of goods, services, or information between businesses or within a business.

Virtue

A trait or quality deemed to be morally good and thus is valued as a foundation of good moral being.

Moral Standards

The principles of right and wrong that are accepted by an individual or a social group, serving as a guide for ethical behavior and decision-making.