Param, Quasim and Rozi were partners sharing profits in the ratio of their Capital contribution which were Rs. 12,00,000, Rs. 8,00,000 and Rs. 10,00,000 respectively. Their books are closed on 31st March every year. Param dies on 30th September, 2025. Under the partnership deed, deceased partner is entitled to his share of profit/loss from the closing of last balance sheet till the date of death based on the average profits of preceding three years. If profits were 2022 Rs. 1,00,000; 2023 Rs. 1,30,000 (loss); 2024 Rs. 1,95,000 and 2025 Rs. 1,60,000 then Param's share of profit/loss will be:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Rs. 15,000 (Profit)
The deceased partner’s share of profit up to the date of death is found on the average profit of the preceding three years, for the time elapsed, in his own profit share.
The three years before the death: 2023 (loss of Rs. 1,30,000), 2024 (Rs. 1,95,000) and 2025 (Rs. 1,60,000); 2022 falls outside them
Average profit = (−Rs. 1,30,000 + Rs. 1,95,000 + Rs. 1,60,000) ÷ 3 = Rs. 2,25,000 ÷ 3 = Rs. 75,000
Period from 1st April to 30th September = 6 months
Profit for the period = Rs. 75,000 × 6/12 = Rs. 37,500
Capital ratio 12 : 8 : 10 = 6 : 4 : 5, so Param’s share = 6/15 = 2/5
Param’s share = 2/5 × Rs. 37,500 = Rs. 15,000 (profit)
NCERT (2026-27 edition): |