Brian and sandy are forming a partnership. brian will invest a truck with a book value of $10,000 and a fair value of $14,000. sandy will invest a building with a book value of $30,000 and a fair value of $42,000 with a mortgage of $15,000. what amount should be recorded in sandy's capital account? $27,000 $30,000 $42,000 $14,000
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Answered on
In a partnership, the capital accounts of the partners reflect their respective contributions to the business. Sandy is contributing a building with a fair value of $42,000 and a mortgage of $15,000.
The amount recorded in Sandy's capital account should reflect her net contribution, which is the fair value of the building minus the mortgage amount:
Building fair value = $42,000
Mortgage = $15,000
Sandy's net contribution = Building fair value - Mortgage
Sandy's net contribution = $42,000 - $15,000
Sandy's net contribution = $27,000
Therefore, the amount recorded in Sandy's capital account should be $27,000.