The Craig-Doran Partnership owns inventory that was purchased for $85,000, has a current replacement cost of...
The Craig-Doran Partnership owns inventory that was purchased for $85,000, has a current replacement cost of $54,500, and is priced to sell for $98,000. At what amount should the inventory be recorded in the accounts of the new partnership if Alexis is to be admitted?
a.$79,167
b.$54,500
c.$85,000
d.$98,000
Homework Answers
Partnership assets account is changed to fair market value from cost when new partner is admitted to partnership. Replacement cost is relevant for revaluing assets on he admission of the new partner. Therefore, the inventory should be recorded at current replacement cost of $54500 in the accounts of the new partnership if Alexis is to be admitted.
Therefore, the correct answer is option b., $54500.
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