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Which ratio is used to calculate a partner’s share of profit up to the date of death?

Answer and explanation

Correct answer: Old profit-sharing ratio

The deceased partner’s share of profit up to the date of death is calculated using the old profit-sharing ratio, because that ratio was applicable before the partner’s death. The new ratio applies only after the firm is reconstituted and therefore cannot be used for the pre-death period. Exam tip: use the old ratio for the period up to death and the new ratio for the period after death.

Related tags

AccountancyPartnershipReconstitutionDeceased PartnerProfit Sharing RatioDeceased Partner’s ShareDeceased Partner S ShareReconstitution Retirement Or Death Of A Partner

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