At the time of dissolution of a partnership firm goodwill does not appears in the balance sheet but a partner took over it at Rs. 60,000 for cash, how this transaction will be recorded in firm's books.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Cash A/c is debited and Realisation A/c is credited with Rs. 60,000
Goodwill is not in the books, so it was never transferred to the Realisation Account. Its sale is still a realisation of an unrecorded asset: the firm receives cash, and the Realisation Account is credited with the price.
Cash A/c Dr. 60,000
To Realisation A/c 60,000
The question says the partner took it over for cash, so the money comes into the firm; the book writes the same entry with Bank A/c, which stands for cash received. Had he taken it against his capital, his capital account would have been debited instead.
NCERT (2026-27 edition):
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