Dalworth and Minor have decided to form a partnership. Minor is going to contribute a depreciable asset to the partnership as her equity contribution to the partnership. The following information regarding the asset to be contributed by Minor is available: Historical cost of the asset $276,000
Accumulated depreciation on the asset $140,000
Note payable secured by the asset and assumed by the partnership $118,000
Agreed-upon market value of the asset $245,000
Based on this information, Minor's beginning equity balance in the partnership will be:
A) $276,000
B) $158,000
C) $136,000
D) $127,000
E) $18,000

Question

Quizplus · Accepted Answer

Minor's beginning equity balance is calculated as the agreed-upon market value of the asset ($245,000) minus the note payable assumed by the partnership ($118,000), resulting in $127,000.

Dalworth and Minor Have Decided to Form a Partnership