Ryan Fuller, a sole proprietor, entered into partnership with another individual. Fuller's investment in the partnership included equipment that was purchased for $45,000. The equipment has a book value of $22,000 and a net agreed-on value of $27,000. In the financial records of the partnership, this equipment and its accumulated depreciation should be recorded at

Question

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The equipment should be recorded at its net agreed-on value of $27,000, which reflects its fair market value at the time of the partnership formation. The accumulated depreciation should be zero because the equipment is being taken into the partnership at its fair market value and not its book value. Therefore, the correct accounting entry would be equipment for $27,000 and accumulated depreciation for $0. Option A is incorrect because it only reflects the book value of the equipment without adjusting for the fair market value. Option B and D are incorrect because they do not reflect the correct net agreed-on value of the equipment.

Ryan Fuller, a Sole Proprietor, Entered into Partnership with Another