On the dissolution of a partnership business,the net book value of the assets is transferred to?
Answer Details
In the dissolution of a partnership business, the net book value of the assets is transferred to the credit of realization account.
Realization account is a nominal account used to record the sale of assets and settlement of liabilities during the process of dissolving a partnership. It is created to determine the profit or loss on the realization of assets and the payment of liabilities after the partnership is dissolved.
The net book value of assets is the value of the assets after deducting accumulated depreciation and any impairment losses. This value represents the amount of cash that can be realized from the sale of these assets.
When the assets are sold, the proceeds are credited to the realization account. If the proceeds exceed the net book value, it results in a profit, which is credited to the partners' capital accounts. If the proceeds are less than the net book value, it results in a loss, which is debited to the partners' capital accounts.
Therefore, in the dissolution of a partnership business, the net book value of the assets is transferred to the credit of realization account. credit of realization account, is the correct answer. debit of realization account, is incorrect because the realization account is credited, not debited. credit of bank account, and debit of bank account, are incorrect because bank accounts are not involved in the transfer of the net book value of assets during the dissolution of a partnership.