Business succession from an Islamic accounting perspective
Joint Authors
Umar, Umar Habibu
Kurawa, Junaidu Muhammad
Source
ISRA International Journal of Islamic Finance
Issue
Vol. 11, Issue 2 (31 Dec. 2019), pp.267-281, 15 p.
Publisher
International Shari'ah Research Academy for Islamic Finance
Publication Date
2019-12-31
Country of Publication
Malaysia
No. of Pages
15
Main Subjects
Abstract EN
Purpose – The purpose of this paper is to discuss the inheritance of a business from the Islamic accounting perspective.
Design/methodology/approach – The paper adapts the relevant provisions of conventional accounting standards and practices that conform to Sharīʿah (Islamic law).
In addition, the provisions of the Islamic accounting standard for musharakah (AAOIFI’s FAS No.
4) found to be relevant are also adapted.
Findings – The study shows that the assets of an inherited business should be measured at their fair values and that liabilities and legacies must be deducted therefrom with the view to arriving at the equity (or residue).
The equity is then distributed among the heirs based on the sharing ratio established according to the Noble Qurʾan, the Sunnah (the Prophet’s way) and Muslim jurists’ views.
Therefore, the inherited business becomes a family business as each heir is admitted into it.
By extension, Islam emphasizes that the business should remain a going concern to generate income to sustain the welfare of the heirs.
Research limitations/implications – The discussion of the paper is limited to the inheritance of a business and its going concern in line with the Sharīʿah.
Practical implications – Special attention should be paid to the inherited business to ensure not only its continuity to generate income for the heirs but also that each heir gets a correct share of the equity of the business as regulated by the Sharīʿah.
Originality/value – This study links Islamic inheritance to the going concern of the business, which from all indications has not been given full consideration by previous studies.
American Psychological Association (APA)
Umar, Umar Habibu& Kurawa, Junaidu Muhammad. 2019. Business succession from an Islamic accounting perspective. ISRA International Journal of Islamic Finance،Vol. 11, no. 2, pp.267-281.
https://search.emarefa.net/detail/BIM-965289
Modern Language Association (MLA)
Umar, Umar Habibu& Kurawa, Junaidu Muhammad. Business succession from an Islamic accounting perspective. ISRA International Journal of Islamic Finance Vol. 11, no. 2 (2019), pp.267-281.
https://search.emarefa.net/detail/BIM-965289
American Medical Association (AMA)
Umar, Umar Habibu& Kurawa, Junaidu Muhammad. Business succession from an Islamic accounting perspective. ISRA International Journal of Islamic Finance. 2019. Vol. 11, no. 2, pp.267-281.
https://search.emarefa.net/detail/BIM-965289
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references : p. 279-281
Record ID
BIM-965289