On what basis is a deceased partner’s share of profit up to the date of death generally estimated?

Correct answer: Time-proportionate estimate based on the previous year’s profit

The deceased partner’s profit up to the date of death is generally estimated by applying a time proportion to the previous year’s profit. For example, if death occurs partway through the year, the profit corresponding to the elapsed months is calculated. Capital balance, cash balance and drawings are not measures of profit. In an examination, check whether the partnership deed specifically prescribes an average-profit or sales basis; if so, that agreed basis is followed.