During the Current Year the Newport Partnership Is Liquidated

question 42

Multiple Choice

During the current year the Newport Partnership is liquidated. Which of the following statements is correct concerning the liquidation of the partnership?
I.If only cash is distributed by the partnership, the partners must recognize a gain but cannot recognize a loss.
II.Gain is recognized only if the amount of cash and property distributed exceeds the partner's basis in the partnership.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Manufacturing Overhead

All indirect costs associated with the production process, including costs related to factory equipment maintenance, utilities, and quality control.

Machine-Hours

A measure of the amount of time a machine is operated in the production process, used for allocating manufacturing overheads.

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead costs to products or job orders, based on a selected activity base.

Casting Department

A department within a manufacturing facility where molten materials are poured into molds to create product components.