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Homework answers / question archive / A partnership is often formed by the joining together of sole trader businesses
A partnership is often formed by the joining together of sole trader businesses. Assets other than cash and liabilities are sometimes contributed. If a depreciating asset is brought into the partnership, it will be recorded in the partnership accounts (books) with: a. debit to asset and credit to accumulated depreciation (as per the partners original accounts) c. debit to asset and credit to accumulated depreciation (as per agreed amounts) b. debit to asset only (as per the current market value) d. debit to asset only (as per the carrying amount in the partners original accounts)
Answer is
a) debit to asset and credit to accumulated depreciation (as per the partner's original accounts)
As givn in the question, partnership is formed by joining toghether of sole trader business. This means two business are combined fully. So, values of the allassets will be as it was there in the partner's original accounts.
If partner has introduced additional asset as capital contribution, then it could have been booked as per agreement or market value as decided but here two sole traders business are combined so it will be as per partner's original accounts.
