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On dissolution, if a partner takes over an unrecorded investment, what entry is made in the partner’s capital account?

Answer and explanation

Correct answer: It will be debited

An unrecorded investment is an asset of the firm. When a partner takes it over, the agreed value of the asset is debited to the partner’s Capital Account and credited to the Realisation Account. Therefore, option A is correct. Option B is incorrect because the partner’s capital account is debited, not credited, when the partner takes over an asset. Exam tip: For an asset taken over by a partner, debit the Partner’s Capital Account.

Related tags

Unrecorded AssetsPartnership DissolutionPartner Capital AccountRealisation AccountAsset TakeoverPartner AccountsDissolution Of A Partnership FirmAccountancy

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