A realisation account is a nominal account used to record the sale of assets and discharge of liabilities at the time of dissolution of a firm. It is created to determine the profit or loss due to the realisation of assets and liabilities. The main objectives of preparing a realisation account are to close all the books of account, record transactions relating to the sale of assets and discharge of liabilities, and determine profit or loss due to the realisation of assets and liabilities.

Features of a realisation account include:

• Sale of assets is recorded at their realised value.
• Payment to liabilities (creditors) is recorded at their settlement value.
• After all the transactions have been recorded, there will be a balance, which may be profit or loss.
• Profit arises when assets are realised at more than their book value or when liabilities are settled at less than their book value. If the two conditions are vice versa, the net result will be a loss.

The accounting treatment of items related to a realisation account includes transferring assets to the realisation account, except cash/bank, P and L debit balance, and loan to a partner. Liabilities are transferred to the realisation account, except loan from a partner. Profit on realisation is transferred to the partners capital account, while loss on realisation is transferred to the realisation account.

In summary, a realisation account is a nominal account used to record the sale of assets and discharge of liabilities at the time of dissolution of a firm. Its main purpose is to determine the profit or loss due to the realisation of assets and liabilities.