The DEF Partnership Reported Net Income of $130,000 for the Year

question 2

Multiple Choice

The DEF partnership reported net income of $130,000 for the year ended December 31, 2008. According to the partnership agreement, partnership profits and losses are to be distributed as follows: How should partnership net income for 2008 be allocated to D, E, and F?

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

Payback Method

An investment analysis method that calculates the time required to recoup the cost of an investment, based on the cash flow it generates.

Capital Cost Allowance (CCA)

The Canada Revenue Agency’s term for depreciation when calculating taxes.

Depreciation

The methodical distribution of the expense of a physical asset across its lifespan.

Projected NPV

The estimated Net Present Value of a project calculated using projected cash flows and a specific discount rate.