Question

Which one of the following alternatives is correct?

•  A. To ensure that compliance is followed, the financial statements of partnerships must be prepared according to IFRS.
•  B. When recording the valuation adjustments, if the value of a liability is decreased, the valuation account credited with the amount of a decrease.
•  C. An existing goodwill account balance is transferred to the partners’ capital accounts on admission of a new partner.
•  D. The fair value of the assets of a partnership is equal to the total equity of a partnership.
•  E. The selling price of the partnership business is determined by the value of its assets.

Answer 1

Fair Market Value of the Partnership means (a) the sum of (i) the Value of the Partnership's Businesses and (ii) any current assets of the Partnership (excluding inventory).

So, the correct answer is D.