At the time of dissolution, if all the firm's assets are sold at their book values and realization expenses are excluded, what will be the result from the realization of assets?

Correct answer: Neither profit nor loss

When assets are sold for an amount equal to their book value, the book value transferred to the Realisation Account and the sale proceeds are equal. Therefore, realization of the assets results in neither profit nor loss. Realization expenses would generally create a loss, but they are excluded in this question. Exam tip: Compare the sale proceeds with the book value—higher means profit, lower means loss, and equal means neither profit nor loss.