Discuss the various methods of computing the share in profits in the event of death of a partner.

Explanation

In the unlikely event of the death of a partner throughout the year, the fiduciary is entitled to a percentage up to the date of death of the partner. percentage is often calculated by 2 methods:



1. On-Time Basis: during this methodology, profit earned until the date of partner's death is taken into account for calculation on the idea of last year/year’s profit or average profit earned in a previous couple of years. it's assumed that profit can stay constant throughout the year and also the deceased partner are eligible for a profit share that is proportionate until the date of the partner’s death.


Share of Deceased Partner in Profit=



`("Time period from date of balance sheet till death")/("12 Months/52 Weeks / 365 Days")xx"Profit Share of deceased partner"`
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