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JK Partnership currently has two partners, Mr. J and Mrs. K. The partnership business has...

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Accounting

JK Partnership currently has two partners, Mr. J and Mrs. K. The partnership business has done very well, and the partners feel that each of their partnership interest should be worth about $150,000. The partners are thinking of bringing in a new partner, Mr. L, to further expand the partnership business. J's capital account is $85,000, while K's capital account is $100,000. Mr. L agrees to pay $95,000 directly to the partnership. In this situation, Mr. L's adjusted cost base (ACB) of his partnership interest in JK Partnership is

A.

$100,000.

B.

$97,500.

C.

$95,000.

D.

$92,500.

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