When a partner dies, which rule is applied to calculate the partner’s share of profit?

Correct answer: Estimated profit for the period up to the date of death, in the partner’s profit-sharing ratio

A deceased partner is entitled to the share of profit earned from the beginning of the accounting period up to the date of death, calculated in the partner’s profit-sharing ratio. Profit earned after that date belongs to the continuing partners, so using the entire year’s profit is incorrect. The profit up to the date of death is generally estimated using the previous year’s profit, sales, or time basis. Exam tip: profit up to the date of death × the deceased partner’s profit-sharing ratio.