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(Solved): Multilateral Mudaraba Company 1 entered into a Mudaraba contract with Bank Muslim where it provides ...
Multilateral Mudaraba Company 1 entered into a Mudaraba contract with Bank Muslim where it provides monetary capital of $1,000,000 for investments. The Bank provides a Mudaraba Al-Muqayadda investment account facility whereby the Bank will invest in a specific project as agreed by the company. Another investor, Company 2 also agreed to invest $500,000 into the project. The profit sharing between the three of them is 2:1:1 for Company 1, Company 2, and the Bank respectively. Bank Muslim then entered into another Mudaraba contract (Re-Mudaraba) with Company 3 to undertake a housing development project and agreed on a profit-sharing ratio of 80:20 (Bank: Company 3). Bank Sharia contributed the $1,500,000 as monetary capital based on a three-year Mudaraba financing contract (Mudaraba muqayadda). Assume the following results of the venture: You are required to: Determine the profit/loss of the above transactions. Show how profit/loss allocation to all parties is based on: (i) Each Period method; and (ii) End of Contract method of profit recognition.