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Reassessment of Liabilities (Retirement)

State whether...

Question

State whether the following statements are True or False.

Realisation loss is not transferred to insolvent partner’s Capital Account.

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Solution

False

Explanation: Realisation loss is transferred to All Partners’ Capital Accounts (including the insolvent partner). After this, the total amount of capital deficiency is ascertained and is shared by the other solvent partners in their profit-sharing ratio.

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