Unrecorded assets when taken over by a partner are shown on:

When unrecorded assets are taken over by a partner during dissolution, they are shown on the Credit side of Realisation Account.

Unrecorded assets are those assets that exist physically but were never recorded in the books of accounts (not appearing in the Balance Sheet). Common examples include goodwill generated internally or any asset purchased but not entered in books.

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Journal Entry:

Partner's Capital A/c Dr

To Realisation A/c

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Reasoning:

Since these assets were never recorded in books, they have no account balance. Therefore, they cannot be transferred to Realisation Account by debiting it (as we do with recorded assets).

When a partner takes over an unrecorded asset:

• The partner is essentially paying for it → Partner's Capital A/c is debited
• The firm receives value from disposing this asset → Realisation A/c is credited

The credit to Realisation Account represents the benefit/value received by the firm from these unrecorded assets, which helps in reducing any loss or increasing profit on realisation.

Think of it this way: Whether an asset was recorded or unrecorded, when it's disposed of (taken by partner), its value must be credited to Realisation Account as it represents disposal proceeds.