Treatment of settlement of a loan using unrecorded asset in realisation account and other accounts during dissolution of firm
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You do not pass any entry for the value of the unrecorded asset against settlement of loan in dissolution.
This is because passing such entry will require you to debit and credit both realisation a/c which is not how it works.
Case 1:
If you have a loan of ₹1000 and an unrecorded asset of ₹1000 and the question states that this unrecorded asset is used to settle the loan. It is then settled without recording this transaction.
Case 2;:
If you have a loan of ₹1000 and an unrecorded asset of ₹900 and the question states that you have to settle the loan using the unrecorded asset. You do not have to record the ₹900 settlement of the loan but you need to record the ₹100 difference in realisation by paying from Cash/Bank a/c.
Case 3:
If you have a loan of ₹1000 and an unrecorded asset of ₹1100 and the question states that you use the unrecorded asset to settle the loan account , then you settle it without passing any entry and the entire value of the unrecorded asset is used.
Thanks