While estimating a deceased partner’s share of profit up to the date of death, which basis is generally used if the partnership deed contains no provision?

Correct answer: Average profit of previous years

When the partnership deed is silent, the average profit of previous years is generally used to make a reasonable estimate of profit up to the date of death. It gives a balanced indication of the firm’s normal earning capacity. Current-year sales alone do not represent profit, and cash balance and total liabilities are not measures of profit. Exam tip: The estimated profit is multiplied by the relevant time fraction and the deceased partner’s profit-sharing ratio to calculate the share.