In the process of liquidation, a partnership firm sells its non-cash assets of a book value of $50,000, for $75,000. Which of the following will be included in the entry to record the sale of assets at liquidation?

Question

Quizplus · Accepted Answer

When a partnership firm sells its non-cash assets during the process of liquidation, any gain or loss on disposal is recorded separately in the partners' capital accounts. In this case, the firm sold assets for $75,000 that had a book value of $50,000, resulting in a gain of $25,000. Therefore, the entry to record the sale of assets at liquidation will credit Gain on Disposal by $25,000, not $75,000.

In the Process of Liquidation, a Partnership Firm Sells Its