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Initial Investments and Tax Bases AIC P A Adapted The DELS partnership was formed by combining individual accounting practices on May 10 20X1 The initial investments were as follows

Initial Investments and ax Bases [AIC Adapted]

The DELS partnership was formed by combining individual accounting practices on May 10,

20X1. The initial i estments were as foll ws:

 

 

Cur ent alue

ax Basis

Delaney:

 

 

Cash

$ 8,000

$ 8,000

Building

60,000

32,000

Mortgage payable, assumed by DELS

36,000

36,000

Engstrom:

 

 

Cash

9,000

9,000

Office furniture

23,000

17,000

Note payable, assumed by DELS

10,000

10,000

Lahey:

 

 

Cash

12,000

12,000

Computers and printers

18,000

21,000

Note payable, assumed by DELS

15,000

15,000

Simon:

 

 

Cash

21,000

21,000

Library (books and periodicals)

7,000

5,000

 

Required

a. Prepare the journal entry to record the initial investments using GAAP accounting.

Calculate the tax basis of each partner’s capital if Delaney, Engstrom, Lahey, and Simon agree to assume equal amounts for the payables.

Jul 14 2020 View more View Less

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