At the time of dissolution, if an asset is realised at an amount equal to its book value, what will be the effect in the Realisation Account for that asset?

Correct answer: No profit or loss

When an asset is realised at an amount equal to its book value, the difference between the realisation value and book value is zero. Therefore, the asset contributes neither profit nor loss to the Realisation Account. A value higher than the book value would result in a profit, while a lower value would result in a loss. Exam tip: Realisation profit or loss = Realisation value − Book value.