A & B are partners. They admit C as a new partner for 1/3rd share. C contributed some assets to his capital and goodwill. Which of the following assets can be treated as capital?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- All of these.
When admitting a new partner, the assets contributed by the incoming partner can be treated as capital if they are to be used in the business.
Stock: This is a current asset that is part of the inventory of the business. It can be treated as part of the capital contribution.
Debtors: These are amounts receivable from customers and are considered current assets. They can also be treated as part of the capital contribution.
Land: This is a fixed asset with a long-term use in the business. It can be treated as capital.
Therefore, all of these assets Stock, Debtors, and Land can be treated as part of the capital contribution when a new partner is admitted into a partnership. So, the correct answer is All of these.