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When Asset is taken over by a creditor:
- a)Debit side of Realisation A/c
- b)Only in Cash A/c
- c)Credit side of Realisation A/c
- d)No Entry in this case
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
When Asset is taken over by a creditor:a)Debit side of Realisation A/c...
Any asset taken over by the creditor at the time of dissolution of partnership firm, will not be shown separately or no separate entry will be recorded for the same.
Most Upvoted Answer
When Asset is taken over by a creditor:a)Debit side of Realisation A/c...
No Entry in this case
Explanation:
When an asset is taken over by a creditor, it means that the creditor has acquired ownership of the asset in lieu of the debt owed by the debtor. However, in terms of accounting treatment, there is no need for any entry to be made in this case. This is because the asset has been transferred to the creditor and is no longer owned by the debtor. Therefore, there is no need to record any transaction related to this transfer.
In general, the Realisation Account is used to record the sale of assets and the distribution of proceeds among the partners or creditors. However, in this case, since there is no sale of the asset, there is no need to debit or credit the Realisation Account.
Similarly, there is no need to record any entry in the Cash Account, as there is no cash transaction involved in this case.
Overall, the absence of any accounting entry reflects the fact that the transfer of asset to the creditor is a legal transaction rather than an accounting transaction. As such, it does not have any impact on the financial statements of the debtor or the creditor.
Explanation:
When an asset is taken over by a creditor, it means that the creditor has acquired ownership of the asset in lieu of the debt owed by the debtor. However, in terms of accounting treatment, there is no need for any entry to be made in this case. This is because the asset has been transferred to the creditor and is no longer owned by the debtor. Therefore, there is no need to record any transaction related to this transfer.
In general, the Realisation Account is used to record the sale of assets and the distribution of proceeds among the partners or creditors. However, in this case, since there is no sale of the asset, there is no need to debit or credit the Realisation Account.
Similarly, there is no need to record any entry in the Cash Account, as there is no cash transaction involved in this case.
Overall, the absence of any accounting entry reflects the fact that the transfer of asset to the creditor is a legal transaction rather than an accounting transaction. As such, it does not have any impact on the financial statements of the debtor or the creditor.
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When Asset is taken over by a creditor:a)Debit side of Realisation A/c...
Correct answer is Option D. Because the account of creditor is settled by giving an asset and there is no creditors or asset account open, there are only partners capital A/c, Realisation A/c, Bank A/c opened...Also in same journal entry we can't debit Realisation A/c and Credit Realisation A/c,i.e.Realisation A/c. Dr To Realisation A/c.This entry is not possible...So this is the reason why there is no entry in case of assets taken over by creditors..
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When Asset is taken over by a creditor:a)Debit side of Realisation A/cb)Only in Cash A/cc)Credit side of Realisation A/cd)No Entry in this caseCorrect answer is option 'D'. Can you explain this answer?
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