As part of the initial investment, Ray Blake contributes equipment that had originally cost $125,000 and on which accumulated depreciation of $100,000 has been recorded. If similar equipment would cost $150,000 to replace and the partners agree on a valuation of $29,000 for the contributed equipment, what amount should be debited to the equipment account?

Question

Quizplus · Accepted Answer

The equipment should be debited at the agreed valuation of $29,000, as the value of assets contributed to a partnership is based on the agreed upon value among the partners, not the historical cost, replacement cost, or the accumulated depreciation.

As Part of the Initial Investment, Ray Blake Contributes Equipment