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Partners interest on capital

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Querist : Anonymous

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Querist : Anonymous (Querist)
23 August 2011 Dear Expert,

Interest rate on capital to partners is 12% in partnership deed.

Whether it is calculated on the closing balance of capital or opening balance?

Our client has calculated on day basis.
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CMA Ramesh Krishnan

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CMA Ramesh Krishnan (Expert)
23 August 2011 It is need to be calculated on proportionate with the balances

suppose year starting Rs.10000

After 4 months again partner bringing Rs.5000 means

10000 for 4 months

Rs.15000 for balance 8 months
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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
23 August 2011 It depends on the wordings used in the partnership deed. In the absence of specific method, interest has to be calculated on the daily balance outstanding in the account.
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