Morgan and Kristen Formed an Equal Partnership on August 1

question 33

True/False

Morgan and Kristen formed an equal partnership on August 1 of the current year. Morgan contributed $60,000 cash and land with a basis of $18,000 and a fair market value of $40,000. Kristen contributed equipment with a basis of $42,000 and a value of $100,000. Kristen's tax basis in her interest is $42,000; Morgan's tax basis is $78,000.

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Definitions:

Book Value

The net value of an asset according to its balance sheet account balance, taking into account depreciation or amortization.

Fair Value

The sum obtained from disposing of an asset or incurred when transferring a liability in a structured deal with market participants at the time of assessment.

Noncontrolling Interest

A share in the equity of a subsidiary not owned by the parent company, reflecting minority shareholders' interests.

Earnings

The profit a company generates during a specific period, typically reported as net income.