Sale of assets to partner

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Anjum (Querist)
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12 May 2015 Question: A private company has 2 partners with equal shares. Assets acquisition value is 10 lacs, while book value is 3 lacs. one of the partners want to buy these assets at book value I.e. 3 lacs. what would be the accounting entry for the sale of assets. Also what is the entry if they decide to adjust it again retained earnings. thanks. Anjum.

Vishrut Shah

Vishrut Shah (Expert)
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12 May 2015 First of all for company there can not be any partner but shareholder.

Any of its promoters can buy asset by following entry :

Partner Account Dr.
Asset Account Cr.

It can never be adjusted against retained earnings as company is always a separate entity.