Chapter9ed15

Chapter9ed15 - Chapter 15 Test Bank PARTNERSHIPS FORMATION,...

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Chapter 15 Test Bank PARTNERSHIPS – FORMATION, OPERATIONS, AND CHANGES IN OWNERSHIP INTERESTS Multiple Choice Questions LO1 1. Under the Uniform Partnership Act, loans made by a partner to the partnership are treated as: a. advances to the partnership for which interest shall be paid from the date of the advance. b. advances to the partnership that are carried in the partners' capital accounts. c. Accounts Payable of the partnership for which interest is paid. d. advances to the partnership for which interest does not have to be paid. LO1 2. A partner assigned his partnership interest to a third party. Which statement best describes the legal ramifications to the assignee? a. The assignment of the partnership interest does not entitle the assignee to partnership assets upon a liquidation. b. The assignment dissolves the partnership. c. The assignee has the right to share in the management of the partnership. d. The assignee does not become a partner but has the right to share in future partnership profits and to receive the proper share of partnership assets upon liquidation. LO1 3. In the Uniform Partnership Act, partners have I.mutual agency II.unlimited liability a. I only b. II only c. I and II d. Neither I or II 96
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LO1 4. Partnerships a. *are required to prepare annual reports b. **are required to file income tax returns but do not pay Federal taxes c. *are required to file income tax returns and pay Federal income taxes d. *are not required to file income tax returns or pay Federal income taxes LO2 5. Langley invests his delivery van in a computer repair partnership with McCurdy. What amount should the van be credited to Langley’s partnership capital? a. tax basis b. fair value at the date of contribution c. Langley’s original cost d. assessed valuation for property tax purposes Use the following information for questions 6, 7 and 8. A summary balance sheet for the McCune, Nall, and Oakley partnership appears below. McCune, Nall, and Oakley share profits and losses in a ratio of 2:3:5, respectively. Assets Cash $ 50,000 Inventory 62,500 Marketable securities 100,000 Land 50,000 Building-net 250,000 Total assets $ 512,500 Equities McCune, capital $ 212,500 Nall, capital 200,000 Oakely, capital 100,000 Total equities $ 512,500 97
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The partners agree to admit Pavic for a one-fifth interest. The fair market value of partnership land is appraised at $100,000 and the fair market value of inventory is $87,500. The assets are to be revalued prior to the admission of Pavic and there is $15,000 of goodwill that attaches to the old partnership. LO2 6. By how much will the capital accounts of McCune, Nall, and Oakley increase, respectively, due to the revaluation of the assets and the recognition of goodwill? a. The capital accounts will increase by $25,000 each.
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This note was uploaded on 01/29/2009 for the course BA 459 taught by Professor Slattery during the Spring '09 term at Southern Oregon.

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Chapter9ed15 - Chapter 15 Test Bank PARTNERSHIPS FORMATION,...

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