Skip to content

CA Foundation · Accounting · Partnership and LLP Accounts

A and B share profits equally. On dissolution, the book value of assets (other than cash) is ₹5,00,000 and these realise ₹4,40,000. Outside liabilities of ₹1,20,000 are settled for ₹1,10,000, and realisation expenses of ₹6,000 are paid by the firm. What is the loss on realisation to be transferred to partners' capital accounts?

The net realisation loss is ₹56,000. Assets fetched ₹60,000 less than book value, the creditors were settled ₹10,000 below their book amount, a gain, and expenses cost ₹6,000. So the net loss is 60,000 minus 10,000 plus 6,000, shared equally by A and B.

  1. A₹56,000Correct
  2. B₹60,000
  3. C₹46,000
  4. D₹66,000

Explanation

Assets realised ₹4,40,000 against book value ₹5,00,000 gives a loss of ₹60,000. Discount on liabilities of ₹10,000 is a gain. Expenses of ₹6,000 are a loss. Net loss = 60,000 − 10,000 + 6,000 = ₹56,000, i.e. ₹28,000 per partner. Ignoring the discount gives ₹66,000, which is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Partnership and LLP Accounts shows your real accuracy, how long you take and where you lose marks.

Practise Partnership and LLP AccountsFree diagnostic mock

More Partnership and LLP Accounts questions