Deceased Partner’s Share

The deceased partner’s share of profit up to the date of death is calculated on the basis of the partner’s profit-sharing ratio. Once this ratio is identified, the profit for the relevant period can be allocated to the deceased partner. Stock value, bank balance and cash balance may be relevant to other accounting adjustments, but they do not determine the partner’s share of profit. Exam tip: Always identify the profit-sharing ratio before allocating profit among partners.

A deceased partner’s share may include adjustments for capital, goodwill, accumulated profits or losses, and profit up to the date of death. An error can understate or overstate the amount payable and lead to an unfair settlement. Therefore, option A is correct; accuracy does not automatically increase sales, reduce tax, or raise stock. Exam tip: include every adjustment up to the date of death before determining the final amount payable.

The relevant accounting principle is settlement of the deceased partner’s amount due. The capital account records the partner’s contributed capital and the accumulated adjustments affecting that balance, such as reserves, undistributed profits or losses, goodwill, and profit earned up to the date of death. Thus, it provides the primary base for determining the amount payable to the deceased partner or to the partner’s representative. The bank account only shows cash and bank transactions; it does not measure the partner’s claim. Purchases and sales accounts record trading activity and are not personal settlement accounts. Therefore, option A is the best answer, although a complete calculation may require several additional adjustments.

The deceased partner is entitled to the profit earned up to the date of death. Therefore, this share is credited to the deceased partner’s capital account, increasing the amount payable to the partner’s estate. The executor’s account is generally used later when the final amount due is transferred. Exam tip: For profit earned up to the date of death, credit the deceased partner’s capital account.

The deceased partner’s share of profit up to the date of death must be calculated according to the special method specified in the partnership deed, because the partners’ agreed contractual terms take precedence. An estimate based on the previous year’s profit is used only when the deed contains no specific provision. Exam tip: check the partnership deed first; apply the usual estimation method only in its absence.

Goodwill is the monetary value of the firm’s reputation, customer relationships and other intangible advantages. At the time of death, the deceased partner is entitled to his share of this value, so it is credited in the final settlement and adjusted by the continuing partners. Option B relates to external liabilities, while C and D concern business operations. Exam tip: In retirement or death adjustments, treat the partner’s share of goodwill as an amount payable to that partner.

Estimated profit up to death = Last year's profit × 3/12 = ₹1,44,000 × 3/12 = ₹36,000. Since profit is assumed to accrue evenly, 3 months represents one-fourth of the year. For such questions, multiply the annual profit by the number of months divided by 12.

General reserve represents accumulated profit earned up to the date of reconstitution, when the old partners were sharing profits in the old ratio. Therefore, the deceased partner’s share is credited to the deceased partner’s Capital or Current Account in the old profit-sharing ratio. The new ratio applies only to profits earned after reconstitution, not to past reserves. Exam tip: distribute existing reserves and accumulated profits in the old ratio.

While calculating the amount due to a deceased partner, the partner’s share of accumulated losses is deducted because it has a debit effect on the partner’s capital or current account. In contrast, the share of goodwill, accumulated reserves and profit up to the date of death are credited to the account. Exam tip: profit-related items are generally added, whereas losses and drawings are deducted.

The deceased partner's share of goodwill is calculated as ₹2,10,000 × \(1/7\) = ₹30,000. Therefore, option A is correct. The nearby distractor ₹35,000 represents \(1/6\) of the goodwill, not \(1/7\). In exams, multiply the total goodwill by the partner's share.

When the amount due to a deceased partner is not paid immediately, it is transferred to the Executor’s Loan Account. This account represents the firm’s liability to the deceased partner’s executor, and the amount is paid later through this account. Stock, Sales and Purchase Accounts are unrelated to this liability. Exam tip: Remember that deferred payment of a deceased partner’s dues is recorded in the Executor’s Loan Account.

A partner’s partnership ends upon death; therefore, the deceased partner is not entitled to profits earned by the firm after the date of death. The partner’s share of profit up to the date of death is calculated and credited to the deceased partner’s executor’s account. Option B is not the fundamental reason—the entitlement ends because the partnership ends on death, not merely because the person does not become a new partner. Exam tip: calculate the deceased partner’s profit share only up to the date of death.

In the profit-sharing ratio 4:1, the total number of parts is 4 + 1 = 5. A is entitled to 4 parts, so A’s share of the profit earned up to the date of death is \(4/5\). B’s share is \(1/5\), not A’s share. Exam tip: Divide the partner’s ratio by the sum of all partners’ ratios to find that partner’s fraction of profit.

Revaluation profit arises from the change in the values of assets and liabilities up to the date of death. Since the deceased partner was a partner up to that date, his share of this profit is credited in the old profit-sharing ratio. He is not entitled to it as a new partner or creditor. Exam tip: profits or losses accrued up to the date of death are adjusted in the deceased partner’s Capital or Current Account.

The deceased partner’s share of profit is calculated as: Total profit × profit-sharing ratio = ₹80,000 × 1/4 = ₹20,000. Therefore, option A is correct. ₹25,000 is not one-fourth of ₹80,000. In the examination, multiply the total profit by the partner’s profit-sharing ratio.

The deceased partner’s account is adjusted for capital, goodwill, accumulated profits or losses, revaluation profit or loss, and profit or loss up to the date of death. Its closing balance generally represents the amount payable to the deceased partner’s legal representative. The firm’s cash balance is shown separately in the Cash Account, so option D is incorrect. Exam tip: this amount is usually transferred to the executor’s account.

The deceased partner’s share of the reserve is credited according to that partner’s profit-sharing ratio. Therefore, the amount is ₹60,000 × \(1/3\) = ₹20,000. ₹15,000, ₹30,000 and ₹10,000 represent \(1/4\), \(1/2\) and \(1/6\), respectively, so they are incorrect. Exam tip: Distribute the reserve in the partners’ old profit-sharing ratio and identify the deceased partner’s share.

The deceased partner is entitled to profit for the period during which he or she remained a partner, that is, up to the date of death. Therefore, the deceased partner’s agreed share of the current year’s profit earned up to that date is credited to the capital account or the executor’s account. There is no entitlement to profits earned after death. Exam tip: distinguish profit up to the date of death from goodwill and revaluation adjustments.

Estimated profit up to death = Previous year’s profit × 8/12 = ₹1,08,000 × 8/12 = ₹72,000. Therefore, option A is correct. ₹54,000 represents six months’ profit, not eight months’ profit. In the examination, multiply the previous year’s profit by the number of months up to death and divide by 12.

If there is no expected fall or other adverse fluctuation in the value of investments, the Investment Fluctuation Reserve is distributed among the old partners in their profit-sharing ratio, and the deceased partner’s share is credited to the deceased partner’s account. If a loss on investments is expected, the reserve is first used to cover that loss. Exam tip: Check the possibility of a fall in investment value before distributing the reserve.

The deceased partner’s capital and his share of the reserve are added to his account. Therefore, the amount is ₹90,000 + ₹12,000 = ₹1,02,000. ₹98,000 results from subtraction, while ₹1,10,000 and ₹92,000 reflect incorrect addition. Exam tip: A partner’s share of the reserve is generally credited to the partner’s Capital Account.

Goodwill is an intangible asset because it has no physical form, although it represents the firm’s reputation, customer relations and earning capacity. On a partner’s death, the deceased partner’s share of goodwill is adjusted in the partner’s Capital or Current Account while calculating the amount payable. Cash, stock and furniture are physical or tangible assets. Exam tip: Assets that can generally be seen or touched are tangible; goodwill is a standard example of an intangible asset.

The deceased partner’s share of profit = Total profit × Profit-sharing percentage = ₹1,50,000 × 10/100 = ₹15,000. Therefore, ₹15,000 is correct. ₹18,000 would represent 12% of the profit, not 10%. In exams, convert the percentage into a fraction or decimal before multiplying by the total profit.

The amount due to a deceased partner is payable to the partner’s legal heir or legal representative, who therefore generally makes the claim. A customer deals with the firm’s goods or services, a bank may be a lender or account holder, and an auditor only examines the accounts; none of them succeeds to the deceased partner’s rights. Exam tip: On death, the deceased partner’s share of profit is calculated up to the date of death and the amount due is paid to the legal representative.

Time-apportioned profit = Annual profit × period up to death / 12 months = ₹2,40,000 × 11/12 = ₹2,20,000. Hence, option A is correct. ₹2,00,000 represents the profit for 10 months, not 11 months. In such questions, multiply the annual profit by the number of completed months up to death and divide by 12.