Question

In case of dissolution, assets are transferred to Realisation Account:

Options

• At Book Value

• At Market Value

• Cost or Market Value, whichever is lower

• None of the Above

Answer 1

At Book Value

Explanation:

On dissolution of a partnership firm, assets are transferred to the Realisation Account at their book value, as per accounting rules. This is done to record the sale or transfer of assets and to determine the profit or loss on realisation, which is then distributed among the partners according to their profit-sharing ratio. Market value is only considered when the asset is actually sold, not at the time of transfer to the Realisation Account.