PARTNERSHIP FORMATION: TRUE or FALSE

Fact pattern:

Mr. Debinsky contributed inventory with purchase cost of P300 and net realizable value of P350 to a partnership. Mr. Debinsky acquired the inventory on account and the partnership will assume the unpaid balance of P80.

1. The partnership will record the inventory at P350.

2. Mr. Debinsky's capital account in the partnership books will be credited for P270.

Fact pattern:

Piw and Pie agreed to form a partnership. Piw contributed cash of P200 while Pie will be contributing her expertise. The partnership agreement stipulates that Piw and Pie shall have equal interests in both the initial capital of the partnership and in subsequent partnership profits and losses.

3. The cash contribution of Piw shall be debited for P200 but the net credit to Piw's capital account shall be P100.

4. Immediately after partnership formation, the balance of Pie's capital account in the partnership books is zero.