Applicability of garner vs murray rule
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
09 May 2017
While solving sums on dissolution of partnership firm after insolvency of one partner, I noticed that the Garner vs Murray rule concerning adjusting of fixed capitals for any reserves before distributing deficiency of insolvent partner between solvent partners has not been followed in certain sums. From the point of view of exams, should it be followed only when the question specifically asks to do so, or should it be followed irrespective?
Amol S Joglekar
(Expert)
09 May 2017
Garner Vs Murray rule is to be followed if the debit balance of the Capital account of any of the partners is NOT recoverable from the said partner.
There could be cases, where such a debit balance may not be required to be recovered.... may be due to higher market value OR discount given by creditors and so on....
There could be cases, where such a debit balance may not be required to be recovered.... may be due to higher market value OR discount given by creditors and so on....
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