At the time of dissolution, if an asset is taken over by a partner, what journal will be recorded in the books of the firm :-
Answer & explanation
Correct answer: option 1
The correct answer is option 1-
Partner Capital A/c Dr.
To Realisation A/c.
When a partner takes over the assets, they need to be brought into the books and accounted for. This is done by recording the asset on the credit side of the Realisation Account. For an asset taken over by a partner, the following journal entry is passed-
Partner’s Capital A/c Dr.
To Realisation A/c
Partner's Capital A/c is debited as their capital balance decreases with the asset amount and realisation account is credited as assets were already transferred to realisation account.