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What is the correct treatment for an abnormal gain at the end of the year in process costing?
1. Carried forward as a credit balance in the abnormal gain account
2. Carried forward as a debit balance in the abnormal gain account
3. Written off as a debit to the statement of profit or loss
4. Written off as a credit to the statement of profit or loss
Sir I didn’t understand the question. the abnormal gain is credited to the abnormal gain a/c and then after debiting the a/c with the scrap proceeds, the actual gain is then credited to the SOPL and hence the abnormal gain a/c is debited. Which part is the question about? Please explain
the ans is 4.
The answer is 4.
1 and 2 are not correct because we do not carry forward a balance on the abnormal gain account.
4 is correct because, as you have stated, rather than carry forward a balance we credit the SOPL with the amount of the gain.