X, Y and Z decided to form XYZ Partnership. It was agreed that X will contribute an
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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?
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