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(Solved): Multilateral Mudaraba Company 1 entered into a Mudaraba contract with Bank Muslim where it provides ...




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Multilateral Mudaraba Company 1 entered into a Mudaraba contract with Bank Muslim where it provides monetary capital of 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 into the project. The profit sharing between the three of them is 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 (Bank: Company 3). Bank Sharia contributed the 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.


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