How is purchase of an asset in another country treated in the capital account?

Open in App

Solution

Purchase of an asset in a foreign country appears as a negative (debit) item in the capital account (as them is an outlaw of foreign exchange).

Suggest Corrections

Similar questions

Find current account balance from the following:

$\begin{matrix} Items & (Rs in crores) (i) Capital account balance & 80 (ii) Export of services & 20 (iii) Balance of visible trade & 50 (iv) Transfers from one country to an another country & 5 \end{matrix}$

Give an example for each of the following types of transaction.
(i) Increase in one asset, decrease in another asset.
(ii) Increase in asset, increase in liability.
(iii) Increase in asset, increase in owner's capital.
(iv) Decrease in asset, decrease in liability.
(v) Decrease in asset, decrease in owner's capital.
(vi) Decrease in liabilities, increase in owner's capital.
(vii) Increase in one liability, decrease in another liability.
(viii) Increase in liabilities, decrease in owner's capital.

If a partner takes over an asset, such Partner’s Capital Account is __________________.

Q. If the purchase price exceeds the net assets taken over, the difference is treated as ___________.

Q. _______ is a book of account, in which all types of accounts relating to assets, liabilities, capital, expenses and revenues are maintained.

Join BYJU'S Learning Program