At the time of dissolution of a Firm, the Loan from a Partner Account should be

Paid out separately

The correct answer is Option (1) → Paid out separately

• A loan from a partner is treated as a liability of the firm, but it is not transferred to the Realisation Account.

• At the time of dissolution, loans from partners are paid after settling all external liabilities but before returning capital to partners.

• Hence, the correct accounting treatment is that the loan from a partner is paid out separately.