Question

Purchase consideration receivable from limited company is debited to which account

Answer 1

Answer:

In such case, all assets and liabilities are transferred to a separate account which is called "Realization A/c". Amount of purchase consideration shall also be transferred to realization a/c.

Answer 2

Purchase Consideration Receivable is debited to the Realization Account.

What is a Realization Account and When it is used?

• The sale of an asset and the discharge of a liability is recorded in a nominal account which is called Realization Account.
• A realization account is opened when its assets and liabilities are ascertained to know their profits and losses.
• Transferring the assets except bank and cash are recorded on the debit side and transferring the liabilities except for partners' capital and partners' loans are recorded on the credit side.
• It is open during the disclosure of any partnership firm.