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Calculation Of The Total Amount Due To The Representatives Of The Deceased Partner

On the death of a partner, accounts in the books of the firm are maintained in the same way as on the retirement of a partner. Thus the legal representatives of the deceased partner are entitled to claim the following amounts, which are credited to his capital account:

1.          The amount standing to the credit of his Capital A/c.

2.          His share of the increase in the value of Goodwill of the firm.

3.          Interest on Capital, if provided in the partnership deed.

4.          His share of profit on the revaluation of assets and liabilities.

5.          His share of the undistributed profits or reserves.

6.          His share of Life Policy.

7.          His share of profit upto the date of his death.

The following amounts will be debited to the account of the deceased partner for ascertaining the amount due to his legal representatives:

1.          Drawings

2.          Interest on drawings

3.          His share of loss on the revaluation of assets and liabilities.

4.          His share of undistributed loss, such as debit balance of Profit and Loss Account.

5.          His share of the reduction in the value of goodwill.

All of the above mentioned adjustments are first made in the deceased partner’s capital account and then the balance of his capital account is transferred to his executor’s account.

The legal representative of a deceased partner is entitled, at his discretion, to interest at 6% p.a. on the amount due from the date of death to the date of payment or to that portion of profit which is earned by the firm with the amount due to the deceased partner.

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