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Partnership
(1) Martin has been in partnership with Norma and Oprah since 1 January 2005. The partnership’s trading profit for the year ended 31 December 2017 was £54,600.
(2) Until 30 September 2017, profits were shared 40% to Martin, 30% to Norma and 30% to Oprah. Since 1 October 2017, profits have been shared equally.
Solution Given : –
Working – Trading profit
1 January to 30 September 2017 54,600 x 9/12 x 40% — 16,380
1 October to 31 December 2017 54,600 x 3/12 x 1/3 — 4,550Total Profit for Martine = 20,930
My Question is why the profit is not apportioned according to TAX Period.
My Solution was : –
1 January to 30 September 2017 54600 *6/12= 27300 * 40% = 10920/-
1 October to 31 December 2017. 54600-27300 = 27300 /3 = 9100/-
Total Profit = 20020 /-
Sorry but you need to go back and study this area as your calculations are wrong and the suggested solution – as you may expect – is correct!
You need to study Chapter 8 of the OT study notes and watch the lectures – you should not be attempting any past exam questions without working through the study notes in conjunction with the lectures.Study Notes Chapter 8 p.49 Section 3(a)
“The trading income or trading loss is divided between the partners according to their profit sharing arrangements in force during the ACCOUNTING PERIOD.”
Also please note that your question was titled “Corp Tax ..”. This is NOT a corporation tax question!
In your own best interest it is essential that you firstly work through the Study Notes and Lectures and do the assigned work following each chapter
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