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Hello
Why is the share of profit for 5 months 1,667? Shouldnt it be 5/12 X 3000=1,250?Hi,
You cannot take 5/12 of the 3,000 profit for the year as this includes the specific reorganisation cost that cannot be pro-rated as it occurred on a specific date in the year.
We therefore have to add this back to the profit for the year to get the profit excluding the reorganisation cost, which gives 4,000. We can then pro-rate this by 5/12 to give the 1,667.
Thanks
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