Ultimate Book of Accountancy

By Dr. Vinod Kumar

New Change in Syllabus from 2022 onwards

Chapter Dissolution of partnership firm.

(i) If the realized value of tangible assets is not given it should be considered
as realized at book value itself.

(ii) If the realized value of intangible assets is not given it should be

considered as nil (zero value).

Let us understand through the following Examples:

Example 1: Rule of Tangible Assets

Vinod and Satish are partners. They have decided to dissolve the partnership firm on
31st March 2022. The following extracted information is given to you:

Balance Sheet (Extract)

Liabilities Amount Assets Amount

Machinery 2,00,000
Furniture 10,000
Stock 60,000
Additional information:

Machinery realized Rs.1,80,000 and Stock at Rs.55,000.

Solution. Realisation Account

Particulars Amount Particulars Amount

To Sundry Assets:
Machinery 2,00,000 By Bank (Assets realized):
Furniture 10,000 Machinery 1,80,000
Stock 60,000 2,70,000 Furniture 10,000
Stock 55,000 2,45,000

Note: The realized value of Furniture is not given in the additional information. In such
a case it should be assumed that Furniture is sold at its book value.
 Ultimate Book of Accountancy
By Dr. Vinod Kumar

Example 2: Rule of Intangible Assets

Vinod and Satish are partners. They have decided to dissolve the partnership firm on
31st March 2022. The following extracted information is given to you:

Balance Sheet (Extract)

Liabilities Amount Assets Amount

Machinery 2,00,000
Furniture 50,000
Stock 70,000
Trademarks 20,000
Additional information:

Machinery realized Rs.1,90,000; Furniture Rs.40,000 and Stock at Rs.80,000.

Solution. Realisation Account

Particulars Amount Particulars Amount

To Sundry Assets:
Machinery 2,00,000 By Bank (Assets realized):
Furniture 50,000 Machinery 1,90,000
Stock 70,000 Furniture 40,000
Trademarks 20,000 3,40,000 Stock 80,000
Trademarks Nil 3,10,000

Note: The realized value of Trademarks is not given in the additional information. In
such a case it should be assumed that nothing is realized from the Trademarks.

Example 3: Both Tangible Assets and Intangible Assets

Vinod and Satish are partners. They have decided to dissolve the partnership firm on
31st March 2022. The following extracted information is given to you:

Balance Sheet (Extract)

Liabilities Amount Assets Amount

Machinery 2,00,000
Furniture 10,000
Stock 60,000
Patents 40,000
Goodwill 10,000
Additional information:

Machinery realized Rs.1,80,000 and Stock at Rs.55,000. Patents realized 80% only.
 Ultimate Book of Accountancy
By Dr. Vinod Kumar

Solution. Realisation Account

Particulars Amount Particulars Amount

To Sundry Assets:
Machinery 2,00,000 By Bank (Assets realized):
Furniture 10,000 Machinery 1,80,000
Stock 60,000 Furniture 10,000
Patents 40,000 Stock 55,000
Goodwill 10,000 3,20,000 Patents 32,000
Goodwill Nil 2,77,000

Note:

(i) The realized value of Furniture is not given in the additional information. In such a
case it should be assumed that Furniture is sold at its book value.

(ii) Realized value of Goodwill is not given, so it will be assumed that nothing is realized from it.

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