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

Answer and explanation

Correct answer: No profit, no loss

When an asset is realised for an amount equal to its book value, the amount credited to the Realisation Account equals the amount transferred from the asset account. Therefore, no profit or loss arises on realisation. A profit occurs only when the realisation value exceeds the book value, while a loss occurs when it is lower. Exam tip: Calculate realisation value − book value to identify the profit or loss on realisation.

Related tags

Partnership DissolutionRealisation AccountAsset RealisationBook ValueAccounting McqDissolution Of A Partnership FirmAccountancyClass 12 Mcq

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