Rodriguez and Ying start a partnership business on July 1, 2014. Rodriguez brings in cash worth $4,000, furniture with a current market value of $50,000, and computer equipment. The computer equipment cost $45,000 in 2011 and has an accumulated depreciation of $25,000. The current market value of the computer equipment is $18,000. At what value should the computer equipment be recorded in the books of the partnership firm?

Question

Quizplus · Accepted Answer

The computer equipment should be recorded at its current market value of $18,000. This is because the partnership should record assets at their fair market value as of the date they are contributed to the partnership. The fact that the equipment has accumulated depreciation does not affect its fair market value or the amount at which it should be recorded in the partnership's books. Therefore, choice (B) is the correct answer.

Rodriguez and Ying Start a Partnership Business on July 1