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Question

At the time of dissolution of the firm; if goodwill appears in the Balance Sheet, it is transferred to ______________ .

A
Realisation Account.
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B
Partners' Capital Accounts
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C
Revaluation Account
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D
None of these
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Solution

The correct option is D Realisation Account.
All assets are transferred to the debit side of the Realisation account during the time of dissolution. Goodwill is treated like any other asset and is shown on the debit side of the Realisation account if it already appears in the books. If Goodwill is sold, the amount received on such sale will be shown on the credit side of the Realisation account.

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