A, B and C decided to form ABC Partnership. The partners agreed that A will contribute his equipment which was originally purchased for P1,600,000 for use in his sole proprietorship. The equipment has a net book value of P500,000 immediately prior to formation of the partnership. A believes that the equipment can be sold for P750,000. A day after the partnership formation, the equipment was sold for P600,000 in an orderly transaction between the partnership and another market participant. B will contribute his real property with historical cost of P2,700,000 but was appraised by an expert at a value of P3,000,000. The property is subject to a mortgage payable amounting to P600,000 which is to be assumed by the partnership. The partners agreed that B will have a 60% interest in the partnership and that A and C will have an interest equivalent to their corresponding capital contribution. C will contribute cash. How much is the agreed capitalization of the partnership? (The correct answer is 4,000,000. I just need the solution to understand it, thanks)
A, B and C decided to form ABC
B will contribute his real property with historical cost of P2,700,000 but was appraised by an expert at a value of P3,000,000. The property is subject to a mortgage payable amounting to P600,000 which is to be assumed by the partnership. The partners agreed that B will have a 60% interest in the partnership and that A and C will have an interest equivalent to their corresponding capital contribution. C will contribute cash.
How much is the agreed capitalization of the partnership? (The correct answer is 4,000,000. I just need the solution to understand it, thanks)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
