1. Abdullah bin Ahmad has entered into a Mudarabah contract with Bank Amanah Berhad in which he provides monetary capital of $500,000 to be managed and invested by the Bank. The Bank provides Al-Mudharabah Moqayadah investment account facility to Abdullah whereby the Bank will invest in a specific project as agreed by the client. For this project there are two other investors, Hashim and Ibrahim who have invested $500,000 and $200,000 respectively. The profit sharing between four of them is 5:5:2:2 for Abdullah, Hashim, Ibrahim, and the Bank respectively. The Bank has entered into another Mudarabah contract (ReMudaraba) with Al Majd Development Berhad to undertake manufacturing project and they agreed on the profit sharing ratio of 70:30 (Bank: Al Majd). You are required to determine the profit or loss to be shared at the end of the contract by the five parties involved above if: i. Profit $550,000 ; or ii. Loss $350,000. 2. Bank Ahsan Berhad contributed $2,000,000 for a five-year Mudarabah contract (Mudarabah Muqayaddah) for property development project to Redevelopment Sdn Bhd. The profit sharing ratio agreed by both parties is 2:1 between the Bank (Rabb al-Mal) and Redevelopment Sdn Bhd (Mudarib) respectively. The project incurred loss of $120,000 in the first year; realized profit $375,000 in the second year; realized profit of $450,000 in the third year; incurred loss of $220,000 in the fourth year; and realized profit of $250,000 in the fifth year. Required: i. Show how profit to be allocated between the Bank, and the Mudarib will appear in the respective income statements from year 1 to year 5, if the profit of Mudarabah is determined at the end of: • Each period • The contract
1. Abdullah bin Ahmad has entered into a Mudarabah contract with Bank Amanah Berhad in which he provides monetary capital of $500,000 to be managed and invested by the Bank. The Bank provides Al-Mudharabah Moqayadah investment account facility to Abdullah whereby the Bank will invest in a specific project as agreed by the client. For this project there are two other investors, Hashim and Ibrahim who have invested $500,000 and $200,000 respectively. The profit sharing between four of them is 5:5:2:2 for Abdullah, Hashim, Ibrahim, and the Bank respectively. The Bank has entered into another Mudarabah contract (ReMudaraba) with Al Majd Development Berhad to undertake manufacturing project and they agreed on the profit sharing ratio of 70:30 (Bank: Al Majd).
You are required to determine the profit or loss to be shared at the end of the contract by the five parties involved above if: i. Profit $550,000 ; or ii. Loss $350,000.
2. Bank Ahsan Berhad contributed $2,000,000 for a five-year Mudarabah contract (Mudarabah Muqayaddah) for property development project to Redevelopment Sdn Bhd. The profit sharing ratio agreed by both parties is 2:1 between the Bank (Rabb al-Mal) and Redevelopment Sdn Bhd (Mudarib) respectively. The project incurred loss of $120,000 in the first year; realized profit $375,000 in the second year; realized profit of $450,000 in the third year; incurred loss of $220,000 in the fourth year; and realized profit of $250,000 in the fifth year.
Required: i. Show how profit to be allocated between the Bank, and the Mudarib will appear in the respective income statements from year 1 to year 5, if the profit of Mudarabah is determined at the end of:
• Each period
• The contract
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