Reconstitution of Partnership : Death of a Partner

Answer

Death of a partner necessarily dissolves the partnership but the firm continues. The remaining partners continue the business and settle the deceased partner's dues.

Answer

Accounts in the books of the firm are maintained in the same manner as on the retirement of a partner. The main extra task is finding the deceased partner's share of accrued profits or losses.

Answer

Retirement is usually planned and effective from the closing date of an accounting year, while death may occur at any time during the year without notice. Also, a retiring partner receives payment him…

Answer

The two methods are: 1) On the Basis of Time, and 2) On the Basis of Turnover or Sales. These methods are used because closing books exactly on the date of death is often inconvenient.

Answer

The sub-methods are: 1) On the Basis of Last year's Profit, and 2) On the Basis of Average Profit. Under time basis, profit is assumed to accrue evenly over the year.

Answer

Deceased Partner's share of profit = Last year's profit / Average of Profit × (Time till date of death / 12 or 365) × Share of Deceased Partner. The time can be taken in months out of 12 or days out o…

Answer

Deceased partner's share of profit = (Last year's profit / Last year's sales) × Sales till date of death × Share of deceased partner. This method uses the profit-to-sales ratio of the previous year to…

Answer

Average Profit = Total Profits ÷ No. of years. It is calculated from the chosen past years' profits and then used for estimating the deceased partner's share.