In the AD Partnership,Allen's Capital Is $140,000 and Daniel's Is

question 58

Multiple Choice

In the AD partnership,Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio,respectively.They decide to admit David to the partnership.Each of the following questions is independent of the others.
-Refer to the information provided above.David directly purchases a one-fifth interest by paying Allen $34,000 and Daniel $10,000.The land account is increased before David is admitted.By what amount is the land account increased?

• A)$40,000
• B)$10,000
• C)$36,000
• D)$20,000

---

Definitions:

Production

The process of creating goods or services through the combination of labor, materials, and capital.

Bushels

A measurement of volume mainly used in the United States for quantifying agricultural products.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain at a constant.

Average Variable Cost

The total variable cost divided by the quantity of output produced, representing the average cost of production excluding fixed costs.