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In: AccountingQUESTION 3The XYZ partnership has been operating for several years. All ofits assets were...QUESTION 3The XYZ partnership has been operating for several years. All ofits assets were purchased by the partnership, and at the end of thecurrent year it’s balance sheet, which has been expanded to showthe current fair market value of assets and capital, is asfollows:AssetsLiabilities & CapitalAB/BookFMVLiabilitiesCash$600$600NoneAccts. Rec.0200Equipment100200Stock5001000Land3001000Total$1500$3000Capital AccountsTax/BookFMVX$500$1000Y5001000Z5001000$1500$3000On the last day of the current year, W joins the partnership. Inexchange for a contribution of $1000 cash, she receives a 25%interest in partnership profits, losses, and capital.Reconstruct the balance sheet of the partnership following W’sadmission to the partnership, assuming, in the alternative:The partnership does not elect to revalue its assets under §1.704- 1(b)(2)(iv)(f), orThe partnership does elect to revalue its assets under theregulations.If W had purchased X’s interest in the partnership instead ofacquiring an interest through a contribution to the partnership,would the partnership be permitted to revalue its assets under theregulations? Why or why not?