The Percentages Shown Are the Residual Profit and Loss Sharing

question 25

Multiple Choice

The percentages shown are the residual profit and loss sharing ratios.The partners dissolved the partnership on July 1,2014,and began the liquidation process.During July the following events occurred:

-The book value of the partnership equity (i.e.,total equity of the partners) on June 30,2014 is

• A)$ 58,000.
• B)$ 60,000.
• C)$ 84,000.
• D)$120,000.

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Definitions:

Fair Value

An estimate of the market value of an asset or liability, based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Consideration

In legal and accounting terms, it refers to the value, either monetary or a promise of action, that is exchanged between parties in a contract.

Residual Value

the estimated value that an asset will have at the end of its useful life.

Straight-Line Method

A depreciation technique that allocates an equal portion of an asset’s initial cost to each year of its useful life.