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Let's break down the problem step by step:

1. **Elsa's Contribution:**
   - Elsa invests **₱300,000** in cash for a **60% interest** in the partnership's capital and profits.

2. **Perla's Contribution:**
   - Perla contributes land and a building. The land has an original cost of **₱40,000** and a fair market value of **₱70,000**.
   - The building has a tax basis of **₱50,000** and a fair market value of **₱90,000**.
   - The building is subject to a **₱40,000 mortgage**, which the partnership will assume.

3. **Cash Contribution by Perla:**
   - Perla's contribution in the form of land and building must be compared to Elsa’s ₱300,000 cash contribution, which gives her a 60% interest.
   - The partnership assumes Perla's **₱40,000 mortgage**, which decreases her total contribution.

4. **Calculation of Total Value of Perla's Contribution:**
   - Land (fair market value): **₱70,000**
   - Building (fair market value): **₱90,000**
   - Total value of assets: **₱70,000 + ₱90,000 = ₱160,000**

   Subtract the mortgage the partnership assumes:
   - Total after mortgage assumption: **₱160,000 - ₱40,000 = ₱120,000**

   So, Perla’s total non-cash contribution is **₱120,000**.

5. **Determining Cash Contribution:**
   - For Elsa’s **₱300,000** investment to give her a **60% interest**, the total value of the partnership should be **₱300,000 / 0.60 = ₱500,000**.
   - Since Perla’s non-cash contribution is **₱120,000**, to reach a total partnership value of **₱500,000**, she needs to contribute cash to make up the difference.

   Required cash contribution by Perla:
   - **₱500,000 - ₱120,000 = ₱380,000**

   But since Elsa holds **60%**, Perla should contribute enough to hold **40%** of the value:
   - Therefore, her total cash contribution should be **₱80,000** to balance the total investment ratio.

**Answer:**
The correct amount of cash Perla should contribute is **₱80,000**, which matches option **b.**

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Do you need further details or clarifications? Here are five related questions to deepen your understanding:

1. How would Perla’s cash contribution change if the mortgage was higher than ₱40,000?
2. How does the partnership’s assumption of a mortgage affect Perla’s total contribution value?
3. What would Elsa’s percentage of ownership be if Perla contributed ₱120,000 in cash along with the property?
4. How would the calculations differ if Elsa contributed property instead of cash?
5. How is the fair market value of property used in partnership contribution calculations?

**Tip:** In partnership agreements, the assumed mortgage is subtracted from the partner's contribution value since it is a liability transferred to the partnership.

Elsa and Perla form a new partnership. Elsa invests P300,000 in cash for her 60 percent interest in the capital and profits of the business. Perla contributes land that has an original cost of P40,000 and a fair market value of P70,000, and a building that has a tax basis of P50,000 and a fair market value of P90,000. The building is subject to a P40,000 mortgage that the partnership will assume. What amount of cash should Perla contribute?

Learn how to calculate the cash contribution for a partnership where Elsa invests P300,000 for a 60% stake, and Perla contributes land and a building with a mortgage. Step-by-step solution covering equity ratios, asset values, and partnership accounting concepts.

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