James Company, a proprietorship, had the following selected business transactions during the year: (a) In each situation, identify whether the accounting treatment is correct, incorrect or partially correct. 1. Land with a cost of $415,000 was recorded at its fair value of $465,000. 2 A lease agreement to rent equipment from an equipment supplier starting next year was signed. The rent is $500 per month and the lease is for two years. Payments are due at the start of each month. Nothing was recorded in James Company's accounting records when the lease was signed. 3. James paid the rent for an apartment for the owner's personal use and charged it to Rent Expense. James prepaid for a one-year insurance policy for $1,200. The amount was charged to Insurance Expense. 5. James included a note in its financial statements stating the company is a going concern. 4. 6. James included a note in its financial statements stating the company is following ASPE. Question 14 (2.5 points) In the absence of any express or implied agreement to the contrary, O a) a new plner may be admitted to a partnership by the decision of a majority of the partners and no partner is entitled to payment for acting in the partnership business b) no partner is entitled to payment for acting in the partnership business. Oc) all partners may share equally in partnership capital and profits and must contribute equally towards all losses and no partner is entitled to payment for acting in the partnership business. d) all partners may share equally in partnership capital and profits and must contribute equally towards all losses. e) a new partner may be admitted to a partnership by the decision of a majority of the partners. Next Page Page 14 of 40