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CA Foundation · Accounting · Partnership and LLP Accounts

Asha, Bela and Chitra are partners in an LLP and the LLP agreement is silent on profit sharing. The LLP earns a profit of ₹1,80,000 for the year. How much is each partner entitled to?

Each partner gets ₹60,000. When the LLP agreement is silent, the Act says all partners share profits equally, so the profit of ₹1,80,000 is divided by three. Sharing in proportion to capital is not the default rule for an LLP.

  1. AAsha ₹90,000, Bela ₹60,000, Chitra ₹30,000
  2. BAsha ₹60,000, Bela ₹60,000, Chitra ₹60,000Correct
  3. CAsha ₹1,80,000 as the first partner, others nil
  4. DShared in proportion to their capital contributions

Explanation

Where the LLP agreement is silent, the Act provides that the partners share profits equally. So ₹1,80,000 ÷ 3 = ₹60,000 each. Sharing by capital is not the default rule.

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