Homework Answers
Cost of equipment = $220,000
Accumulated depreciation = $60,000
Book value of equipment = Cost of equipment - Accumulated depreciation
= 220,000 - 60,000
= $160,000
Fair value of equipment = $120,000
An asset brought in by the partner is recorded at its fair value. Hence, cost price of equipment and book value of equipment are irrelevant here.
Hence, the journal entry to record Bagley's investment will be :
Journal
|
Transaction |
Account Title and Explanation |
Debit |
Credit |
| d. | Equipment | 120,000 | |
| Bagley's Capital | 120,000 |
Correct option is (d)
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