The Islamic need for investing inherited wealth and accounting treatments

Umar Habibu Umar; Md Harashid Haron

doi:10.33102/jmifr.v18i1.323

Authors

Umar Habibu Umar Department of Accounting , Yusuf Maitama Sule University, Kofar Kabuga, Kofar Ruwa Road, Kano State, Nigeria
Md Harashid Haron School of Management, Universiti Sains Malaysia, 11800 USM, Penang, Malaysia

DOI:

https://doi.org/10.33102/jmifr.v18i1.323

Keywords:

Islamic inheritance, accounting, inherited wealth, Musharakah, Mudarabah

Abstract

Islamic inheritance involves the allocation of the wealth of a Muslim deceased among his/her heirs after the settlement of legacies and debts. Irrespective of the amount given to each heir, if not invested, one day it will be finished through consumption, which could sooner or later make them live in poverty. Hence, this study intends to justify the Islamic need for investing inherited wealth. Another objective is to provide accounting treatments for basic Islamic inheritance transactions and the admission of heirs into an inherited business through the adaption of the provisions of AAOFI accounting and Bank Negara Malaysia (BNM) Shariah standards for musharakah and mudarabah. The study established that the investment of inherited wealth in either musharakah or mudarabah ventures is in line with the Shariah to enable heirs to generate income sustainably to afford their needs. The study also showed the accounting treatments for basic Islamic inheritance transactions in order to determine the share of the equity and profit or loss of each heir from the business properly and correctly.

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Author Biographies

Umar Habibu Umar, Department of Accounting , Yusuf Maitama Sule University, Kofar Kabuga, Kofar Ruwa Road, Kano State, Nigeria

Md Harashid Haron , School of Management, Universiti Sains Malaysia, 11800 USM, Penang, Malaysia

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