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Seth and Alain have a partnership to which they each initially contributed $20,000. In its first year of operations, the partnership had a net loss
Seth and Alain have a partnership to which they each initially contributed $20,000. In its first year of operations, the partnership had a net loss of $9,000, before any partnership allocations. The partnership agreement specifies the following:
- Seth receives an annual salary of $15,000, and Alain receives an annual salary of $5,000.
- Neither partner received their salary in cash and neither partner had any withdrawals in the year.
- Remaining profit or loss is split 35% for Seth and 65% for Alain.
The partnership reports using ASPE. Which of the following statements regarding the allocation of net loss for the year is true?
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