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Issue for Consideration Other Than Cash

is created to...

Question

____________ is created to provide for the loss by way of fluctuation in the value of investment.

A

Investment fluctuation reserve

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B

Sinking fund

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C

Dividend equalization reserve

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D

Debenture redemption reserve

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Solution

The correct option is A Investment fluctuation reserve
Investments made by a concern are subject to market fluctuations and thus, the value of an investment can any time decrease suddenly in the market. So, Investment fluctuation reserve is maintained to overcome any sudden loss incurred due to a sudden fall in the realisable value of investments.

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Q. ______ is a secret reserve usually created to provide for the loss by way of fluctuation in the value of investment.

Q. _________ is a secret reserve usually created to, provide for the lose by way of fluctuation in the value of investment.

Do we transfer Investment Fluctuation Reserve to Realisation A/c?

Q. The balance in the investments Fluctuation Fund, after meeting the loss on revaluation of investment at the time of admission of a partner will be transferred to _____________ .

Q. Following is the balance sheet of A, B, and C who share profits and losses of the business in the ratio of 3:2:1.

Additional Information:
a. On 1st April, 2021, they admitted D as a partner for 1/4th for which he brought ₹1,20,000 as his capital and ₹30,000 as a share of goodwill.
b.The value of furniture has increased by 10%.
c. Market value of investments brought down to ₹2,00,000.

Investment fluctuation reserve will be distributed between:

[2 marks]

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Issue for Consideration Other Than Cash

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