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On Dissolution of a firm Investment fluctuation reserve appearing in the balance sheet will be: |
Debited to Realisation A/c with full value Credited to realisation A/c with full value Debited to all Partners' Capital A/c in their profit sharing ratio Credited to all Partners' Capital A/c in their profit sharing ratio |
Credited to realisation A/c with full value |
The correct answer is option 2- Credited to realisation A/c with full value. Investment fluctuation reserve is a reserve created to absorb fluctuations in the value of investments held by a company. At the time of dissolution, the investment fluctuation reserve will be transferred to the Realisation Account, which is used to record the dissolution of the partnership and the distribution of assets and liabilities. Since the investment fluctuation reserve is a reserve, it will have a credit balance. Therefore, it should be credited to the Realisation Account. |
