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CMA Intermediate · Financial Accounting · Death of Partner

Dev, Esha and Farid share profits 2:2:1. Dev dies on 1 October; the firm's year ends 31 March. The profit for the previous year was Rs 1,50,000 and the partnership deed provides that the deceased partner's share of profit up to the date of death is to be computed on the basis of the previous year's profit on a time basis. What is Dev's share of profit credited to his capital account?

Dev's profit share up to death is Rs 30,000. His full-year share of the previous year's profit is two-fifths of Rs 1,50,000, which is Rs 60,000, and the period from 1 April to 1 October is six months, so half of it is credited.

  1. ARs 30,000Correct
  2. BRs 60,000
  3. CRs 24,000
  4. DRs 12,000

Explanation

Dev's full-year share = 1,50,000 x 2/5 = 60,000. Time from 1 April to 1 October = 6 months, so 60,000 x 6/12 = 30,000. Rs 60,000 ignores the time proportion, and Rs 24,000 uses 1/5 share for the whole period incorrectly weighted.

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