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For Discussion PDF
DEFINITION
By the contract of partnership two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of dividing the profits among
themselves.
1. Which of the following is not a characteristic of most partnership?
a. Limited liability
b. Limited life
c. Mutual agency
d. Ease of formation
2. He refers to a partner who contributed not only money and property, but also industry to
the newly formed partnership
a. Industrial partner
b. Nominal partner
c. Capitalist-industrial partner
3. It refers to a partnership wherein all partners are liable to the creditors pro-rata up to the
extent of personal or separate assets after the partnership assets are exhausted
a. General partnership
b. Partnership by estoppel
c. Limited partnership
d. Particular partnership
e. General professional partnership
4. When property other than cash is invested in a partnership, at what amount should the
noncash property be credited to the contributing partner’s capital account?
a. Fair value at the date of contribution
b. Contributing partner’s original cost
c. Assessed valuation for property tax purposes
d. Contributing partner’s tax basis
e. Agreed value among partners
Problem #1
A, B and C decided to form ABC partnership. It was agreed that A will contribute an equipment
with an assessed value of P100,000 with historical cost of P800,000 and accumulated
depreciation of P600,000. A day after the partnership formation, the equipment was sold for
P300,000.
B will contribute a land and building with carrying amount of P1,200,000 and fair value of
P1,500,000. The land and building are subject to mortgage payable of amounting to P300,000
to be assumed by the partnership. The partners agreed that B will have to 60% capital interest
in the partnership. The partners also agreed that C will contribute sufficient cash to the
partnership.
5. What is the total agreed capitalization of the ABC partnership?
a. 1,500,000
b. 2,000,000
c. 2,500,000
d. 3,000,000
6. What is the cash to be contributed by C in the ABC partnership?
a. 500,000
b. 600,000
c. 700,000
d. 800,000
Problem #2
Jesseli admits Anne as a partner in the business. Balance sheet accounts of Jesseli just before
the admission of Anne show: Cash, P26,000, Accounts receivable, P120,000, Merchandise
Inventory, P180,000, and Accounts payable, P62,000. It was agreed that for purposes of
establishing Jesseli’s interest, the following adjustments be made: 1.) an allowance for doubtful
accounts of 3% of accounts receivable is established; 2.) merchandise inventory is to be
adjusted upward by P25,000; and 3.) prepaid expenses of P3,600 and accrued liabilities of
P4,000 are to be recognized.
7. If Anne is to invest sufficient cash to obtain 2/5 interest in the partnership, how much
would Jane contribute to the new partnership?
a. 176,000
b. 190,000
c. 95,000
d. 113,980
Problem #3
On January 1, 2020, Regina, Jessica and Nataly formed a partnership with profit or loss sharing
agreement of 2:3:5.
Regina contributed a land with assessed value of P1,000,000. The land is subject to a real
estate mortgage which is annotated to the title of the land in the amount of P800,000 and will be
assumed by the partnership. The appraised value of the land is P2,400,000. Jessica contributed
a building with a cost of P2,000,000 and accumulated depreciation of P1,500,000. The fair value
of the building is P800,000. Nataly contributed investment in trading securities with historical
cost of P6,000,000. The trading securities have quoted price in active market of P3,000,000.
The partners decided to bring their capital balances in accordance with their profit or loss
sharing agreement. The total agreed capitalization of the new partnership is P10,000,000.
8. Which of the statements is correct?
a. The agreed capital of Nataly is P500,000
b. Regina should contribute additional capital in the amount of P1,800,000.
c. Jessica should contribute additional capital in the amount of P2,200,000.
d. Nataly is entitled to withdraw in the amount of P1,000,000.
Problem #4
On January 1, 2020, Len, May and Nancy decided to form a business partnership to operate
supermarket. Len and May both owned a grocery business with the Statements of Financial
Position as of December 31, 2019:
Problem #5
Abel and Carr formed a partnership and agreed to divide initial capital equally, even though Abel
contributed P100,000 and Carr contributed P84,000 in identifiable assets.
10. Under the bonus approach to adjust the capital accounts, Carr’s unidentifiable asset
should be debited for
a. 46,000
b. 16,000
c. 8,000
d. 0