(Cash and Non-cash Contributions; Bonus)Aguirre and Aranas have decided to form a, partnership. Aguirre contributes cash ofPI,000,000 and Aranas contributes land with a fair market value of P800,000 and abuilding with a fair market value of PI,900,000. Aranas purchased the land and buildingfive years ago for P750,000. Aranas' book value of the land is P175,000 and the bookvalue of the building is P600,000. The PI.500,000 mortgage on the land and building is tobe assumed by the partnership. The partners agree to share profits and losses in the ratio of3:2, respectively.Instructions: 1Prepare the journat entries to record the formation of the partnership undercach of the following independent assumptions:Each partner is credited for the full amount of net assets invested.2.Each partner initially is to have equal interest in partnership capital.

When any asset is brought by partners into business, the fair market value of the same is considered…

Answered: Prepare the journat entries to record…

Business

Accounting

Prepare the journat entries to record the 1ormation of the partnership

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

(Cash and Non-cash Contributions; Bonus)
Aguirre and Aranas have decided to form a, partnership. Aguirre contributes cash of
PI,000,000 and Aranas contributes land with a fair market value of P800,000 and a
building with a fair market value of PI,900,000. Aranas purchased the land and building
five years ago for P750,000. Aranas' book value of the land is P175,000 and the book
value of the building is P600,000. The PI.500,000 mortgage on the land and building is to
be assumed by the partnership. The partners agree to share profits and losses in the ratio of
3:2, respectively.
Instructions: 1Prepare the journat entries to record the formation of the partnership under
cach of the following independent assumptions:
Each partner is credited for the full amount of net assets invested.
2.
Each partner initially is to have equal interest in partnership capital.

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