Bank Shari'ah provides musharaka mutanaqisah financing to Crescent Corporation for a house development project amounting to...
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Bank Shari'ah provides musharaka mutanaqisah financing to Crescent Corporation for a house development project amounting to $10,000,000. This amount represents 75% of the total project costs. The term of financing is for 5 years and the partner is required to pay back the bank in 5 equal installments yearly. The profit-sharing ratio is agreed at 30: 70 (Partner: Bank) and assumed to be constant for the first 2 years of the project. For the next three years, the profit-sharing ratio is agreed to be 25: 75 (Partner: Bank). The profits or losses from the project as disclosed by the partner are as follows: Year 1 2 3 4 5 Profit/(Loss) $ (1, 500,000) (1, 200,000) 2,500,000 1,500,000 1,500,000 You are required to determine the profits or losses to be recognized by both Bank Shari'ah and Crescent Corporation from Year 1 to Year 5. Bank Shari'ah provides musharaka mutanaqisah financing to Crescent Corporation for a house development project amounting to $10,000,000. This amount represents 75% of the total project costs. The term of financing is for 5 years and the partner is required to pay back the bank in 5 equal installments yearly. The profit-sharing ratio is agreed at 30: 70 (Partner: Bank) and assumed to be constant for the first 2 years of the project. For the next three years, the profit-sharing ratio is agreed to be 25: 75 (Partner: Bank). The profits or losses from the project as disclosed by the partner are as follows: Year 1 2 3 4 5 Profit/(Loss) $ (1, 500,000) (1, 200,000) 2,500,000 1,500,000 1,500,000 You are required to determine the profits or losses to be recognized by both Bank Shari'ah and Crescent Corporation from Year 1 to Year 5.
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Year 1 ProfitLoss 1500000 Profit Sharing Ratio 3070 Partner Bank Partner... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
Posted Date:
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