X, Y and Z decided to form XYZ Partnership. It was agreed that X will contribute an equipment with assessed value of P300,000 with historical cost of P800,000 and accumulated depreciation of P500,000. On the date of formation, the fair value of equipment was P 400,000.Y 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 a mortgage payable amounting to P300,000 to be assumed by the partnership.The partners agreed that Y will have 40% capital interest in the partnership. The partners also agreed that Z will contribute sufficient cash to the partnership.Net income for the year is P400,000. How much profit should be allocated to X?a) 1,250,000b) 1,175,000c) 1,050,000d) 1,800,000

In the formation of a partnership, the capital contributions and profit-sharing ratio are decided…

Answered: X, Y and Z decided to form XYZ…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

X, Y and Z decided to form XYZ Partnership. It was agreed that X will contribute an equipment with assessed value of P300,000 with historical cost of P800,000 and accumulated depreciation of P500,000. On the date of formation, the fair value of equipment was P 400,000.

Y 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 a mortgage payable amounting to P300,000 to be assumed by the partnership.
The partners agreed that Y will have 40% capital interest in the partnership. The partners also agreed that Z will contribute sufficient cash to the partnership.

Net income for the year is P400,000. How much profit should be allocated to X?

a) 1,250,000

b) 1,175,000

c) 1,050,000

d) 1,800,000

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions