There was an asset of ₹5,000 which was taken over by a partner at ₹2,500 at the time of dissolution of partnership firm. Partner's Capital Account will be debited by...........
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹2,500.
For an asset taken over by a partner, the following journal entry is passed-
Partner’s Capital A/c Dr. ₹2,500
To Realisation A/c ₹2,500
The partner is receiving an asset worth ₹2,500 (as per the agreement), so their capital account is debited by ₹2,500- the value at which the partner took over the asset, not its original or market value. It means partners capital account is reduced by this amount.