If the guaranteed partners normal share is more than the guaranteed amount how will deficiency be treated in profit distribution?

Correct answer: No deficiency will be recognized

The direct answer is A: no deficiency will be recognized. A guarantee promises a minimum amount, not an additional amount above the partner’s normal entitlement. First calculate the partner’s normal share under the ordinary profit-sharing arrangement. If that normal share is already greater than the guaranteed amount, the partner has automatically received more than the minimum guarantee. Therefore there is no shortfall and no deficiency to be borne by another partner. Option A is correct. Option B is wrong because the whole guarantee is not treated as deficiency; the guarantee is only a minimum. Option C is wrong because the normal share is not itself a deficiency. Option D is wrong because no deficiency exists to be transferred to loss. For example, if the guarantee is Rs 20,000 but the normal share is Rs 25,000, the partner receives Rs 25,000 and the deficiency is zero. Remember: deficiency equals guaranteed amount minus normal share only when the result is positive.