Accounting entry for gift given


(Guest)

Hi all,

A partnership firm has given a Immovable property gift to 2 of its partners. A gift deed is made (with stamp duty value 30Lakh). But the cost of the property in the firm's Balancesheet is only Rs 2Lakh.

The entry passed is

partner's capital a/c 1...Dr Rs 100000

partner's capital a/c 2 ...Dr Rs 100000

To Property account. Rs 200000

If we pass the entry as above the capitals of the partners will be reduced. Since it is a gift for no consideration at all why should the capital balances be reduced? Any suggestions?