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If the firm’s estimated annual profit is ₹6,00,000 and a partner dies 4 months into the financial year, what will be the firm’s estimated profit up to the date of death? Assume that profit is earned uniformly throughout the year.

Answer and explanation

Correct answer: ₹2,00,000

Profit up to the date of death = Estimated annual profit × fraction of the year elapsed = ₹6,00,000 × 4/12 = ₹2,00,000. ₹1,50,000 represents 3 months’ profit, while ₹3,00,000 represents 6 months’ profit. In such questions, divide the elapsed months by 12 to apportion annual profit.

Related tags

Deceased PartnerEstimated ProfitTime ApportionmentPartnership AccountsRetirement Or DeathDeceased Partner’s ShareDeceased Partner S ShareReconstitution Retirement Or Death Of A Partner

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