During dissolution, an asset with a book value of Rs. 70,000 is taken over by a partner at an agreed value of Rs. 60,000. Which entry records the transfer?
Correct answer: A. Partner's Capital Account Dr. 60,000; Realisation Account Cr. 60,000
- A. Partner's Capital Account Dr. 60,000; Realisation Account Cr. 60,000
- B. Realisation Account Dr. 60,000; Partner's Capital Account Cr. 60,000
- C. Cash Account Dr. 60,000; Realisation Account Cr. 60,000
- D. Partner's Capital Account Dr. 70,000; Asset Account Cr. 70,000
Explanation
When a partner takes over an asset, the partner's capital account is debited at the agreed value. The Realisation Account is credited because the asset is treated as realised for Rs. 60,000.
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About Partnership Accounts
Partnership accounts cover the partnership agreement, capital and current accounts, profit and loss appropriation, salaries, interest on capital, interest on drawings and profit-sharing ratios. They also address changes in partnership, including admission, retirement, goodwill, revaluation, dissolution and the settlement of partners’ balances.
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