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At the time of dissolution, the book value of machinery is ₹10,000 and it is sold for exactly ₹10,000. What effect will this transaction have in the Realisation Account?

Answer and explanation

Correct answer: No profit or loss

The realisation value of the machinery is ₹10,000, which equals its book value of ₹10,000. Therefore, this transaction creates neither a profit nor a loss in the Realisation Account. Exam tip: a realisation value higher than book value gives a profit, while a lower value gives a loss.

Related tags

Partnership DissolutionRealisation AccountSale Of AssetsProfit And LossDissolution Of A Partnership FirmAccountancyClass 12 Mcq

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