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Issue for Consideration Other Than Cash

When a firm i...

Question

When a firm is dissolved, Goodwill a/c is closed by transferring to:

A

Capital account of the partners

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B

Revaluation account

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C

Realisation account

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D

Profit & loss account

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Solution

The correct option is B Realisation account
All the assets of the firm which can be converted into cash are transferred to Realisation Account. If goodwill is already appearing in the Balance Sheet, it is treated like any other asset, and is transferred to the Realisation Account at the value given in the Balance sheet. Following entry is passed for it:
Realisation A/c Dr.
To Goodwill A/c

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Issue for Consideration Other Than Cash

Standard XII Accountancy

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