Use the Following Information to Answer the Following Questions

question 99

Multiple Choice

Use the following information to answer the following questions. Izabelle and Marta are forming a partnership. Izabelle will invest a piece of equipment with a book value of $7,500 and a fair market value of $20,000. Marta will invest a building with a book value of $40,000 and a fair market value of $58,000.
What amount will be recorded to the building account?

• A) $28,000
• B) $18,000
• C) $40,000
• D) $58,000

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Definitions:

Merchandise Inventory

The goods a company holds for the purpose of sale to customers.

Cost of Goods Sold

The total cost associated with making or buying the products that a company has sold during a period.

Indirect Manufacturing Cost

Costs in the production process that cannot be directly traced to specific units of product, such as maintenance and facility costs.

Units Produced

The total number of complete products manufactured during a specific period.