How is "Creditors accepted Debtors in full settlement of their claim" treated under dissolution of a firm?

Dear Student,

When creditors accept debtors in full settlement of their claims, neither of it will appear in the Realisation A/c. That is, initially, Debtors will be transferred to the debit side and Creditors will be transferred to the credit side of Realisation A/c but treatment for debtors taken over by creditors will not be shown in the Realisation A/c. It because a liability is set off against an asset.

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