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Question;21. When a partnership is formed, noncash assets;contributed by partners should be recorded;I. at their respective book values for income tax purposes.;II. at their respective fair values for financial accounting purposes.;A. I only;B. II only;C. Both I and II;D. Neither I nor II;22. When a new partner is admitted into a partnership;and the new partner receives a capital credit less than the tangible assets;contributed, which of the following explains the difference?;I. The new partner's goodwill has been recognized.;II. The old partners received a bonus from the new partner.;A. I only;B. II only;C. Either I or II;D. Neither I nor II;23. When a new partner is admitted into a partnership;and the new partner receives a capital credit greater than the tangible assets;contributed, which of the following explains the difference?;I. The old partners' goodwill is being recognized.;II. The new partner's goodwill is being recognized.;A. I only;B. II only;C. Either I or II;D. Both I and II;24. When a new partner is admitted into a partnership;and the capital of the old partners decreases, which of the following explains;the reason for the decrease?;I. Undervalued liabilities were written up to their fair values.;II. Undervalued assets were written up to their fair values.;A. I only;B. II only;C. Both I and II;D. Neither I nor II;25. When a partner retires from a partnership and the;retiring partner is paid more than the capital balance in her account, which of;the following explains the difference?;I. The retiring partner is receiving a bonus from the other partners.;II. The retiring partner's goodwill is being recognized.;A. I only;B. II only;C. Either I or II;D. Neither I nor II;26. When the old partners receive a bonus upon;admission of a new partner into a partnership, the bonus is allocated to;I. all the partners in their profit and loss sharing ratio.;II. the existing partners in their profit and loss sharing ratio.;A. I only;B. II only;C. Either I or II;D. Neither I nor II;27. When a new partner is admitted into a partnership;and the old partners' goodwill is recognized, the goodwill is allocated to;I. all the partners in their profit-and-loss-sharing ratio.;II. the old partners in their profit and loss sharing ratio.;A. I only;B. II only;C. Either I or II;D. Neither I nor II;In the RST partnership, Ron's capital is $80,000;Stella's is $75,000, and Tiffany's is $50,000. They share income in a 3:2:1;ratio, respectively. Tiffany is retiring from the partnership. Each of the;following questions is independent of the others.;28. Refer to the above information. Tiffany is paid;$60,000, and no goodwill is recorded. In the journal entry to record Tiffany's;withdrawal;A. Tiffany, Capital will be credited for $60,000.;B. Ron, Capital will be debited for $5,000.;C. Stella, Capital will be debited for $4,000.;D. Cash will be debited for $60,000.;29. Refer to the above information. Tiffany is paid;$60,000, and no goodwill is recorded. What is the Ron's capital balance after;Tiffany withdraws from the partnership?;A. $74,000;B. $71,000;C. $75,000;D. $86,000;30. Refer to the above information. Tiffany is paid;$56,000, and all implied goodwill is recorded. What is the total amount of;goodwill recorded?;A. $0;B. $6,000;C. $30,000;D. $36,000;In the AD partnership, Allen's capital is $140,000;and Daniel's is $40,000 and they share income in a 3:1 ratio, respectively. They;decide to admit David to the partnership. Each of the following questions is;independent of the others.;31. Refer to the information provided above. What;amount will David have to invest to give him one-fifth percent interest in the;capital of the partnership if no goodwill or bonus is recorded?;A. $60,000;B. $36,000;C. $50,000;D. $45,000;32. Refer to the information provided above. Assume;that David invests $50,000 for a one-fourth interest. Goodwill is to be;recorded. The journal to record David's admission into the partnership will;include;A. a credit to cash for $50,000.;B. a debit to goodwill for $7,500.;C. a credit to David, Capital for $60,000.;D. a credit to David, Capital for $50,000.;33. Refer to the information provided above. Allen and;Daniel agree that some of the inventory is obsolete. The inventory account is;decreased before David is admitted. David invests $40,000 for a one-fifth;interest. What is the amount of inventory written down?;A. $4,000;B. $20,000;C. $15,000;D. $10,000;34. Refer to the information provided above. Allen and;Daniel agree that some of the inventory is obsolete. The inventory account is;decreased before David is admitted. David invests $40,000 for a one-fifth;interest. What are the capital balances of Allen and Daniel after David is;admitted into the partnership?;A. Option A;B. Option B;C. Option C;D. Option D;35. Refer to the information provided above. David;directly purchases a one-fifth interest by paying Allen $34,000 and Daniel;$10,000. The land account is increased before David is admitted. By what amount;is the land account increased?;A. $40,000;B. $10,000;C. $36,000;D. $20,000;36. Refer to the information provided above. David;directly purchases a one-fifth interest by paying Allen $34,000 and Daniel;$10,000. The land account is increased before David is admitted. What are the;capital balances of Allen and Daniel after David is admitted into the;partnership?;A. Option A;B. Option B;C. Option C;D. Option D;37. Refer to the information provided above. David;invests $40,000 for a one-fifth interest in the total capital of $220,000. The;journal to record David's admission into the partnership will include;A. a credit to Cash for $40,000.;B. a debit to Allen, Capital for $3,000.;C. a credit to David, Capital for $40,000.;D. a credit to Daniel, Capital for $1,000.;38. Refer to the information provided above. David;invests $40,000 for a one-fifth interest in the total capital of $220,000. What;are the capital balances of Allen and Daniel after David is admitted into the;partnership?;A. Option A;B. Option B;C. Option C;D. Option D;39. Refer to the information provided above. David;invests $50,000 for a one-fifth interest. What amount of goodwill will be;recorded?;A. $20,000;B. $4,000;C. $40,000;D. $15,000;40. Which of the;following observations is true of an S corporation?;A. It elects to be taxed in the same manner as a corporation.;B. It does not have the burden of double taxation of corporate income.;C. Its shareholders have personal liability for the corporation's;obligations.;D. Its primary income source should be passive investments

 

Paper#44700 | Written in 18-Jul-2015

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