Kevin 40% profit loss ratio. Kevin contributed a horse training machine valued at $100,000. The training machine was acquired on 1/1/2005 at a cost…

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Kevin ‐ 40% profit & loss ratio. Kevin contributed a horse training machine valued at $100,000. Thetraining machine was acquired on 1/1/2005 at a cost of $150,000. The machine originally had a tenyear life (5 years left @1/1/2010) and is depreciated on the straight‐line method using a 10 year life atthe rate of $15,000 of depreciation per year. Accumulated depreciation of $75,000 had been properlyclaimed from 1/1/2004 through 12/31/2009, so the machine had a net tax basis of $75,000 ($150,000cost less $75,000 accumulated depreciation through 12/31/2009) as of the date it was contributed tothe partnership.You need to make a journal entry to record Kevin’s capital contribution of the training machineas of 1/1/2010.

Journal Entry:Training Machine (Dr)100,000Kevin – Capital (Cr)100,000(Record Kevin’s capital contribution by way of training machine)Note: The assets and liabilities contributed to the…

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