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 S12,500.
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 contnbuted 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
Answer: C
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