Fellow CA
86871 Points
Joined June 2009
Vikash - that is why you need to transfer the asset to capital account. Because if you create an account for C and transfer to the asset to C's account, then it would create another asset in your balance sheet in name of C. That is not the purpose of the settlement deed. You are removing the asset from your balance sheet and the corresponding debit is on personal side. Hence, debit the capital account.