ExamTopics Logo
Mail Us[email protected]
Menu
Iia Discussions
exam questions

Exam IIA-CIA-Part3 All Questions

View all questions & answers for the IIA-CIA-Part3 exam
Go to Exam

Exam IIA-CIA-Part3 topic 2 question 36 discussion

Actual exam question from IIA's IIA-CIA-Part3
Question #: 36
Topic #: 2
[All IIA-CIA-Part3 Questions]

An internal auditor was asked to review an equal equity partnership. In one sampled transaction, Partner A transferred equipment into the partnership with a self- declared value of $10,000, and Partner B contributed equipment with a self-declared value of $15,000. The capital accounts of each partner were subsequently credited with $12,500. Which of the following statements is true regarding this transaction?

  • A. The capital accounts of the partners should be increased by the original cost of the contributed equipment.
  • B. The capital accounts should be increased using a weighted average based on the current percentage of ownership.
  • C. No action is needed, as the capital account of each partner was increased by the correct amount.
  • D. The capital accounts of the partners should be increased by the fair market value of their contribution.
Show Suggested Answer Hide Answer
Suggested Answer: C 🗳️
by luluka at Sept. 19, 2021, 10:50 a.m.

Comments

Chosen Answer:
This is a voting comment (?). It is better to Upvote an existing comment if you don't have anything to add.
Switch to a voting comment New
Submit Cancel
emtofid
1 month, 2 weeks ago
Selected Answer: C
In an equal equity partnership, the partners' capital accounts should reflect the agreed-upon equal contribution values, regardless of the initial self-declared values of the contributions. By crediting each partner's capital account with $12,500, the partnership correctly established equal equity between the partners.
upvoted 1 times
...
pppbbb
4 months ago
The partnership in question is "equal equity partnership", which means the capital injection should be equal, i.e. "The capital accounts of each partner were subsequently credited with $12,500". The declared values of the assets are irrelevant as the “fair value” of the assets had been evaluated at $12500 for Partner A and B's asset.
upvoted 1 times
...
Steve8Taiwan
4 months, 1 week ago
I would like to know the reason why not D as well.
upvoted 1 times
...
Evveee
5 months ago
Why not D? It is just a mere valuation of their invested assets and not a share on profit or loss.
upvoted 1 times
...
luluka
5 months, 3 weeks ago
pls explain why not D
upvoted 1 times
...
Community vote distribution
A (35%)
C (25%)
B (20%)
Other
Most Voted
A voting comment increases the vote count for the chosen answer by one.

Upvoting a comment with a selected answer will also increase the vote count towards that answer by one. So if you see a comment that you already agree with, you can upvote it instead of posting a new comment.

SaveCancel
exam
Someone Bought Contributor Access for:
SY0-701
London, 1 minute ago