Delisa invests office equipment with a fair market value of $70,000, delivery equipment with a fair market value of $89,000, and cash of $54,000. She owes $68,000, represented by a note on the delivery equipment. If Delisa's office equipment cost $80,000 and has accumulated depreciation of $30,000, the amount at which the asset should be entered on the books of the new partnership would be

Question

Quizplus · Accepted Answer

The fair market value of the office equipment is not relevant in determining the entry value, as it is given that the cost and accumulated depreciation are known. The carrying value of the office equipment is $50,000 ($80,000 cost - $30,000 accumulated depreciation).

Therefore, the total assets being invested are: 
$50,000 (office equipment) + $89,000 (delivery equipment) + $54,000 (cash) = $193,000

Since there is a note payable of $68,000, the net total assets being contributed is $125,000 ($193,000 - $68,000).

This means that the cost basis of the delivery equipment being contributed is $21,000 ($89,000 fair market value - $68,000 note payable).

Thus, the total asset entry value for the office equipment and delivery equipment would be: 
$50,000 (office equipment) + $21,000 (delivery equipment cost basis) + $54,000 (cash) = $125,000

Therefore, the amount at which the asset should be entered on the books of the new partnership is $70,000 for the office equipment.

Delisa Invests Office Equipment with a Fair Market Value of $70,000