If the firm’s annual profit is ₹10,80,000 and a partner dies after 2 months of the financial year, what is the estimated profit up to the date of death on a time basis?

Correct answer: ₹1,80,000

Profit up to the date of death = Annual profit × Months elapsed / 12 = ₹10,80,000 × 2/12 = ₹1,80,000. This calculation assumes that profit accrues evenly throughout the year. If the partner’s profit-sharing ratio is also given, this amount must be multiplied by that ratio to determine the deceased partner’s actual share. Exam tip: For profit up to the date of death, multiply annual profit by the elapsed months divided by 12.