Question

State the accounting treatment for:

i. Unrecorded assets

ii. Unrecorded liabilities

Answer 1

i) Accounting Treatment for Unrecorded Assets

Unrecorded asset is an asset, the value of which has been written off in the books of accounts but the asset is still in usable position. The accounting treatment for unrecorded asset is:

a) When the unrecorded asset is sold for cash

Cash A/c		Dr.
	To Realisation A/c
(Unrecorded assets sold for cash)

b) When the unrecorded asset is taken over by any partner

Partner's Capital A/c		Dr.
	To Realisation A/c
(Unrecorded asset taken over by the partner)

ii) Accounting Treatment for Unrecorded Liabilities

Unrecorded liabilities are those liabilities which are not recorded in the books of account. The accounting treatment for unrecorded liability is:

a) When the unrecorded liability is paid off

Realisation A/c		Dr.
	To Cash A/c
(Unrecorded liability paid in cash)

b) When the unrecorded liability is taken over by a partner

Realisation A/c		Dr.
	To Partner's Capital A/c
(Unrecorded liability taken over by the partner)