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How would you treat investment fluctuation reserve given in the balance sheet at the time of dissolution?
- a)Debit side of Realisation Account
- b)Cash Account credit side
- c)Debit side of partners’ capital account
- d)Credit side of Realisation Account
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
How would you treat investment fluctuation reserve given in the balanc...
At the time of dissolution, investment fluctuation reserve should be transferred to the credit side of revaluation account. It should not be distributed as free reserve.
Most Upvoted Answer
How would you treat investment fluctuation reserve given in the balanc...
' Capital Accountsd)Credit side of Realisation Account
The correct answer is d) Credit side of Realisation Account.
Investment fluctuation reserve is a reserve created to absorb fluctuations in the value of investments held by a company. At the time of dissolution, the investment fluctuation reserve will be transferred to the Realisation Account, which is used to record the dissolution of the partnership and the distribution of assets and liabilities.
Since the investment fluctuation reserve is a reserve, it will have a credit balance. Therefore, it should be credited to the Realisation Account. This will reduce the total assets of the partnership and increase the equity available for distribution to the partners.
The correct answer is d) Credit side of Realisation Account.
Investment fluctuation reserve is a reserve created to absorb fluctuations in the value of investments held by a company. At the time of dissolution, the investment fluctuation reserve will be transferred to the Realisation Account, which is used to record the dissolution of the partnership and the distribution of assets and liabilities.
Since the investment fluctuation reserve is a reserve, it will have a credit balance. Therefore, it should be credited to the Realisation Account. This will reduce the total assets of the partnership and increase the equity available for distribution to the partners.
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