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David Contributes Investment Land with a Basis of $24,000 and an FMV

question 115

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David contributes investment land with a basis of $24,000 and an FMV of $40,000 to a partnership for a 10% interest in partnership capital, profits, and losses. The land is subject to a $30,000 recourse liability, which is assumed by the partnership. The partnership has other recourse liabilities of $18,000. Partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. David must recognize a


Definitions:

Accounting System

A systematic process used by entities to track financial transactions and summarize financial data.

Cost Effectiveness

An assessment that compares the relative costs and outcomes (effects) of different courses of action.

Useful Information

Data or facts that are relevant and beneficial to decision-making processes, ensuring accuracy and timeliness.

Subsidiary Ledgers

Detailed ledgers that contain information about transactions for individual components, such as customers or suppliers, which are then summarized in the general ledger.

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