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A deceased partner died 5 months after the beginning of the financial year. The average annual profit of the previous years is ₹7,20,000. Based on the average profit, what is the estimated profit up to the date of death?

Answer and explanation

Correct answer: ₹3,00,000

Estimated profit up to the date of death = Average annual profit × fraction of the year elapsed = ₹7,20,000 × 5/12 = ₹3,00,000. Therefore, option A is correct. Option B represents profit for only 4 months. Remember that if the deceased partner’s individual profit-sharing ratio is provided, this amount must be multiplied by that ratio.

Related tags

Deceased PartnerAverage ProfitProfit Till DeathPartnership AccountingRetirement And DeathDeceased Partner’s ShareDeceased Partner S ShareReconstitution Retirement Or Death Of A Partner

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