When applying the loss-absorption method, the following must be recorded in the books of the partnership: O 1. Subtract any budget/contingent expenses from the balances of the partners' capital accounts according to their profit-sharing ratio. 2. Record the interim repayments. 3. Subtract all unsold assets from the balances of the capital accounts of the partners according to the profit-sharing ratio. 4. Record the subtraction of any anticipated capital account deficits from the balance of those accounts with anticipated favorable balances