Treatment of investment fluctuation fund at the time of dissolution of firm??
Dear Student,
Investment Fluctuation Fund Investment Fluctuation Fund is made to face the loss due to decrease in value of Investment Balance Sheet (Old) Treatment of Investment Fluctuation Fund.
Assume that the value of investments in balance sheet is Rs 30,000. And the value of investment fluctuation reserve Rs 21,000 in liabilities in balance sheet. Then following are the cases-
Case 1-Market value of Investment Is `27,000 .There is loss ` 3,000 for which we will use fund. Remaining fund (21000 – 3000 =18000) is distributed among old partners in old ratio.
Investment Fluctuation Fund A/c Dr
To Investment A/c (loss in value of investments)
To Partners Capital a/c (in profit sharing ratio)
Case 2-Market value of Investment Is ` 32,000. No need to use this fund. Distribute whole fund of ` 21,000 among old partner in old ratio.
Case 3-Market value of Investment Is ` 30,000. No need to use This fund distribute whole fund of ` 21,000 among old partner in profit sharing ratio.
Investment Fluctuation Fund Investment Fluctuation Fund is made to face the loss due to decrease in value of Investment Balance Sheet (Old) Treatment of Investment Fluctuation Fund.
Assume that the value of investments in balance sheet is Rs 30,000. And the value of investment fluctuation reserve Rs 21,000 in liabilities in balance sheet. Then following are the cases-
Case 1-Market value of Investment Is `27,000 .There is loss ` 3,000 for which we will use fund. Remaining fund (21000 – 3000 =18000) is distributed among old partners in old ratio.
Investment Fluctuation Fund A/c Dr
To Investment A/c (loss in value of investments)
To Partners Capital a/c (in profit sharing ratio)
Case 2-Market value of Investment Is ` 32,000. No need to use this fund. Distribute whole fund of ` 21,000 among old partner in old ratio.
Case 3-Market value of Investment Is ` 30,000. No need to use This fund distribute whole fund of ` 21,000 among old partner in profit sharing ratio.
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