Assume the Partnership Agreement Specifies Net Income Is to Be

question 68

Multiple Choice

Assume the partnership agreement specifies net income is to be divided as follows: $30,000 to A and $40,000 to B for service with any remaining profit or loss divided equally between the partners.If net loss for the current year is $85,000,A's distributive share of net loss would be:

• A) $37,500
• B) $47,500
• C) $30,000
• D) $40,000

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Definitions:

Salvage Value

The estimated residual value of an asset at the end of its useful life, usually considered for depreciation calculations.

Depreciation Method

A systematic approach used to allocate the cost of a tangible asset over its useful life.

Sales Price

The amount of money charged for a product or service, or the sum that customers are willing to pay for it.

Straight-line Method

A depreciation technique that allocates an equal amount of depreciation expense each year over the useful life of an asset.