Question

X took over investment having book
value of 10,000 for 80% of its book
value. X Accout is debited by
a) 10,000
b) 8,000
c) 18,000
d) 2,000​

Answer 1

Answer:

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Answer 2

Option B is correct i.e. 8,000.

As it is said that X is taking over investment on its 80% of book value.

Book value of investment is 10,000.

80% of book value of investment = 10,000 × $\frac{80}{100}$

                                                      = 8,000

So, investment is in balance sheet is at 10,000 but X is taking it at 8,000.

Now partners  capital will be debited with 8,000 as he is taking investment which is an asset , so his capital will be reduced by the same amount.

Any amount debited in partners capital account show that partners capital have been reduced and any amount credited in partners capital account show that it has increased their capital.