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Why is the old profit-sharing ratio used to calculate a deceased partner’s share of profit up to the date of death?

Answer and explanation

Correct answer: This ratio applied up to the date of death

Up to the date of death, the partnership continues under the existing profit-sharing arrangement. Therefore, the deceased partner’s share in the profit earned up to that date is calculated using the old ratio. The new ratio generally applies among the continuing partners after the partner’s death, so options B and D do not state the correct reason. Exam tip: use the old ratio for the period up to death and the revised ratio for the period after death.

Related tags

AccountancyPartnershipReconstitutionDeceased Partner ShareProfit Sharing RatioRetirement Or DeathDeceased Partner’s ShareDeceased Partner S Share

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