question archive On December 1, 2025, AA and BB formed a partnership, agreeing to share for profits and losses in the ratio of 2:3, respectively
On December 1, 2025, AA and BB formed a partnership, agreeing to share for profits and losses in the ratio of 2:3, respectively
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On December 1, 2025, AA and BB formed a partnership, agreeing to share for profits and losses in the ratio of 2:3, respectively. AA invested a parcel of land that cost him P25,000. BB invested P30,000 cash. The land was sold for P50,000 on the same date, 3 hours after formation of the partnership. How much should be the capital balance of AA right after formation?
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50,000
Step-by-step explanation
Right after formation, we measure land at its fair value. Therefore, the capital balance would be 50,000 as it is amount from which land was sold. It happened on the same day of the formation thus, making it the fair value of land. Therefore, the answer is 50,000 - the amount the land was sold.
