There was an unrecorded asset of ₹ 12,000 which was taken over by a partner at ₹ 10,500 at the time of dissolution of firm. Partner’s Capital Account will be debited by which amount?
Answer & explanation
Correct answer: option 3
The correct answer is option 3: ₹10500
At the time of dissolution, when an unrecorded asset is taken over by a partner, the entry is made at the agreed value (realisation value), not the book value.
Here:
- Unrecorded asset value = ₹12,000 (not in books, so irrelevant for entry)
- Taken over by partner = ₹10,500
For an asset taken over by a partner-
Partner’s Capital A/c Dr. ₹10,500
To Realisation A/c ₹10,500
(with the amount taken over by partner)