Question

payment of reconstruction expenses is debited to ...​

Answer 1

Answer:

An appreciation in the value of an asset or reduction in the amount of a liability should be debited to the account concerned and credited to Capital Reduction Account (or Reconstruction Account)

Answer 2

Reconstruction expenses will be debited to capital reduction a/c.

Explanation:

Internal reconstruction is a process by which a company writes off its losses out of sacrifices made by investors such as shareholders, financers or creditors. the process is carried through a nominal account in name of Capital Reduction A/c or Reconstruction A/c .

so in order to implement this scheme of internal reconstruction company may need to incur some expenses to perform the operations of internal reconstruction.

here is the entry that will be passed:-

     Capital reduction a/c     Dr.     xx

                      To cash a/c                        xx