sir ,
what to do if nothing is given about the realisation of assets at the time of dissolution of the firm .
according to your solutions ; assets remain unrealised and according to ncert they are realised at book value ..
in your notes you stated that both methods can be adopted
so can you answer how both hold corect and help me out of the situation with some example ..
thanking you in advance
At the time of dissolution, Assets are realised on the following basis:
Tangible Assets
- If realizable value is given, we realize them at realizable value.
- If realizable value is not given, we realize them at the book values.
Intangible Assets
- If realizable value is given, we realize them at realizable values.
- If no realizable value is given for the assets, we don’t realize them.
For e.g.; following is the Balance Sheet and some additional information:
Balance Sheet
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Liabilities | Amount Rs | Assets | Amount Rs | ||
Sundry Creditors | 20,000 | Land and Building | 26,000 | ||
Accounts Payable | 25,000 | Cash | 5,500 | ||
Accumulated Profits | 15,000 | Bills Receivable | 25,000 | ||
|
| Sundry Debtors | 30,000 | ||
Capitals : |
| Stock | 40,000 | ||
Gupta | 60,000 |
| Goodwill | 20,000 | |
Malik | 40,000 | 1,00,000 | Patents | 13,500 | |
| 1,60,000 |
| 1,60,000 | ||
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| ||
Assets Realized as under:
Bills Receivables – 24,500
Debtors – 30,000
Stock – 42,000
Patents – 10,000
Solution:
In the above question followings are:
Tangible Assets: Land and Building, Bills Receivables, Sundry Debtors and Stock
Intangible Assets: Goodwill and Patents
Since, the realizable values of Tangible Assets i.e. B/R, Debtors and Stock is given as 24,000 , 30,000 and 42,000 respectively. We realize them at this value.
Realizable Value of Land and Building is not given ad it is also a Tangible Asset so it would be realized at the Book Value i.e. Rs 26,000
Intangible Assets: Realizable value of Patents is given so it would be realized at Rs 10,000 and no value is given for Goodwill so it would not be realized.