Brian and Sandy are forming a partnership. Brian will invest a truck with a book value of $10000 and a fair value of $14000. Sandy will invest a building with a book value of $30000 and a fair value of $42000 with a mortgage of $15000. What amount should be recorded in Sandy's capital account?

Question

Quizplus · Accepted Answer

The recorded amount in Sandy's capital account should be based off of the fair value of her investment, which is $42,000, minus the mortgage of $15,000. Therefore, the recorded amount in her capital account should be $27,000 (the net fair value).

Brian and Sandy Are Forming a Partnership