When investments are sold at their book value on the dissolution of a firm, what is the effect in the Realisation Account?

Correct answer: No profit, no loss

When the sale proceeds of investments equal their book value, there is no difference to be recorded in the Realisation Account. Therefore, the transaction results in neither profit nor loss. For dissolution accounting, compare the sale proceeds with the book value, not with the original cost. Exam tip: proceeds above book value indicate a profit, while proceeds below book value indicate a loss.