Question

During liquidation of a partnership, the entry to sell all non cash assets for lower than...

During liquidation of a partnership, the entry to sell all non cash assets for lower than their recorded value would include:

Homework Answers

Answer #1

When the partnership is liquidated its necessary to sell all the non cash assets for cash and a loss or gain on the same has to be recognized, as the liquidation terminates the partnership.

So when the non cash assets are sold for less than their recorded value, then the partnership realises a loss.  

The journal entry for the same is

Cash XXX
Accumulated Depreciation- equipment(if any) XXX
Loss on realization XXX
Non cash assets XXX
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