Andy and Ian Formed a Partnership on April 1,2019

question 159

Multiple Choice

Andy and Ian formed a partnership on April 1,2019.Andy contributes equipment to the business that originally cost $82,000 and on which accumulated depreciation of $16,000 has been recorded.The current market value of the equipment is $74,000.The value of the equipment recorded in the partnership journal is ________.

• A) $66,000
• B) $74,000
• C) $58,000
• D) $82,000

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Definitions:

Sunk Cost

A cost that has already been incurred and cannot be removed and therefore should not be considered in an investment decision.

Straight-Line Depreciation

A method of allocating an asset's cost evenly over its useful life, resulting in a consistent depreciation expense each year.

Operating Costs

Expenses associated with the day-to-day functions of a business, excluding costs related to production or acquisition of goods.

Rate of Return

The percentage gain or loss on an investment over a specified time period.