As part of the initial investment, a partner 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 $38,000 for the contributed equipment, what amount should be debited to the equipment account?

Question

Quizplus · Accepted Answer

The equipment should be recorded at the agreed valuation of $38,000, which is the fair value agreed upon by the partners.

As Part of the Initial Investment, a Partner Contributes Equipment