Question:
At the time of death of a partner, balance of Investment Fluctuation Reserve after adjusting fall in investment value is treated as:
At the time of death of a partner, balance of Investment Fluctuation Reserve after adjusting fall in investment value is treated as:
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IFR balance after adjustment = divisible profit among all partners.
Updated On: Jun 17, 2026
- Credited to Revaluation Account
- Credited to all partners' capital accounts
- Debited to deceased partner
- Credited to deceased partner
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The Correct Option is B
Solution and Explanation
Concept:
Investment Fluctuation Reserve (IFR) is created to cover decline in value of investments. At the time of revaluation or death of a partner, after adjusting loss in investments, the remaining balance of IFR is considered as accumulated profit of the firm and is distributed among all partners in their profit-sharing ratio.
Step 1: Adjust fall in investment value.
First, IFR is used to cover decline in investments.
Step 2: Remaining balance treatment.
Balance left in IFR represents past profits.
Step 3: Distribution rule.
Remaining IFR is transferred to: \[ \text{All partners' capital accounts} \] Final Answer: Credited to all partners' capital accounts
Step 1: Adjust fall in investment value.
First, IFR is used to cover decline in investments.
Step 2: Remaining balance treatment.
Balance left in IFR represents past profits.
Step 3: Distribution rule.
Remaining IFR is transferred to: \[ \text{All partners' capital accounts} \] Final Answer: Credited to all partners' capital accounts
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