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At the time of dissolution, if a partner takes over an asset at zero value, what does this indicate?

Answer and explanation

Correct answer: Worthless or valueless asset

When a partner takes over an asset at zero value, it means that no recoverable amount has been obtained from the asset; therefore, it is treated as worthless or valueless. It does not represent the firm’s profit, liability, or the partner’s capital. Exam tip: Such an asset is written off in the Realisation Account with no realisation proceeds.

Related tags

Partnership DissolutionRealisation AccountAsset ValuationAccounting TreatmentClass 12 AccountancyDissolution Of A Partnership FirmAccountancyClass 12 Mcq

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