Dissolution of a Partnership Firm

Introduction:
Dissolution of a partnership firm refers to the procedure of winding up the partnership business. It happens when the partnership firm is unable to operate the business or for any other reason, the partners decide to end the partnership.

Methods of Dissolution:
There are several methods of dissolution of a partnership firm. They are:

1. Dissolution by mutual consent
2. Compulsory dissolution
3. Dissolution on the expiry of the partnership term
4. Dissolution by notice
5. Dissolution due to the death of a partner

Realization of Assets:
After dissolution, the partnership assets need to be realized. The process of realizing the assets involves selling the assets, collecting the debts and paying off the liabilities. The amount realized from the assets is used to pay off the liabilities and distribute the remaining amount among the partners.

Appointment of Partner:
A partner can be appointed to realize the assets of the partnership firm. The partner appointed for this purpose is known as a liquidator. The liquidator is responsible for selling the assets, collecting the debts and paying off the liabilities.

Cost of Realization:
The cost of realization refers to the expenses incurred in the process of realizing the assets. The cost includes the expenses of the liquidator, expenses of selling the assets, and other expenses related to the realization of assets. In the given scenario, the cost of realization is 4000.

Actual Amount of Realization:
The actual amount of realization refers to the amount received from the sale of assets, collection of debts, and other sources of income. In the given scenario, the actual amount of realization is 4000, which is equal to the cost of realization.

Conclusion:
Dissolution of a partnership firm is a complex process that involves several steps. The appointment of a liquidator is an important step in the process of realizing the assets of the partnership firm. The cost of realization and the actual amount of realization are important factors that determine the amount available for distribution among the partners.