MUSYARAKAH

Aqilla

INTRODUCTION
Economic growth in Indonesia has entered a progressive stage in the community. where this
growth is marked by the beginning of the development of economic practice. one of them
was marked by a very significant growth in investment practices. investment practices in
this context emphasize seeking profit. In Indonesia, investment practices are based on
conventional principles even though Indonesia is one of the countries with the largest
Muslim population in the world. therefore an investment system is needed that does not
only emphasize profit but is also based on sharia principles that can guarantee that all forms
of investment are fair and transparent and not compelling. therefore in Islam itself the types
of contract agreements that are permitted are regulated. if in the previous chapter we
talked about mudharabah investment contracts. then in this chapter you will learn more
about the musyarakah contract.
SUBTOPIC

1. MUSYARAKAH
PSAK NO. 106 defines Musyarakah as a contract of cooperation between two or
more parties for a particular business, where each party contributes funds with provisions
divided by agreement while losses based on funding contributions.
Musharakah means the partnership established by two or more people by providing a
certain amount of capital to do business together and to share the profit or the loss that
might incur (Hammad, 1996; 318).
The understanding stated aboe shows a significant difference between mudharabah and
musyarakah. if on mudharabah there is one party that provides funds and is responsible for
financial losses. a series of management processes will be carried out by mudharib but in
the Musyarakah contract both parties or more who invest capital will contribute to each
other and work together in managing the business. At the time of the contract itself the
statement of the portion of profits must be very clear. usually there are several approaches
used in the distribution of capital itself. among them can be through the profit sharing ratio
based on the capital invested by each party itself. it can also be based on work portion or
real contribution in the form of management.
in the musyarakah contract each loss will be borne by the partners in accordance with the
portion of their capital. one partner can not bear other partners for the capital that they
have. but they can request guarantees from other parties or third parties. if affraid of
negligence that will be done by a party.
 2. TYPES OF AKAD MUSYARAKAH

In akad musyarakah itself there is some types of akad. Akad musyarakah divided into
two point of view

Based on Islamic jurisprudence / Ulama Fiqh

a. Syirkah Al-Milk
means (co-ownership ) whose existence arises when two or more people gain
joint ownership of a wealth. example: heritage, ownership of a type of item such
as a house purchased together. Syirkah Al- Milk also can be divided into two
catagorize voluntary (Ikhtiary) willing to divide the asset and also involuntary
(Jabari) unwiling to divide the asset.
b. Syirkah Al-Uqud
That is the partnership created by agreement of two or more people to work
together in achieving certain goals. In this form of cooperation partners can
contribute capital / funds or work, and share profits and losses.

this type of syirkah is to be further divided

 Syirkah Abdan
Physical Syirkah / Syirkah charity (work) is a form of cooperation between
workers and professionals where they agree to work together in doing
work and sharing income received. in this type of syirkah partners do not
contribute capital but expertise and energy
example: cooperation between doctors, tailors, furniture artisans,
accountants and others.

 Syirkah Wujuh
form of cooperation between two parties where each party does not
include capital.
like we allow our goods to be sold by dropshipper or reseller. where
usually goods taken from us are paid with a delayed payment. which is
then resold in cash by this reseller. this can be done because they have a
reputation and reputation so that they are trusted by us as the owner of
the goods and potential buyers of the goods.
  Syirkah Inan (negotiation)
Syirkah Inan is a business collaboration between two or more parties,
provided that each party that cooperates provides a contribution of work
(charity) and capital (maal). in this form of cooperation the composition
and position of the party are not the same.

 Syirkah mufawwadhah
is a form of cooperation where the position and composition of the
parties involved in it must be the same in terms of capital, employment,
religion, profit and risk. or Syirkah mufâwadhah syirkah mufawwadah this
can be said as syirkah between two or more parties which combines all
types of syirkah above (syirkah inân, ‘abdan, mudhârabah, and wujûh)

Based on PSAK

a. Permanent musyarakah
Permanent musharaka is musyarakah with the provision that each partner's fund
portion determines the time of the contract and the amount is fixed until the end of
the contract period (PSAK No. 106 par 04). Example : if I invest for 20 milion and my
friend was invest for 20 milion than out capital will remain the same until the end of
akad period

b. Musyarakah decreases or musyarakah mutanaqisah

Decreasing musharaka is musyarakah, provided that part of a partner's funds will be
transferred gradually to another partner so that the fund portion will decrease and
at the end of the contract period the other partner will become the full owner of the
musyarakah business. Example:Partners A and P partners carry out a musyarakah
contract, partner P offers Rp. 100 million and partner A invests Rp. 200 million. As
the partnership with the Musharaka agreement continues, P's partner capital of Rp
100 million will be transferred or will be allocated to partner A through gradual
repayment carried out by partner A.
 3. LEGAL LAW/ SHARIA BASIS

Legal Source Of Musyarakah Contract

a. Al –Quran
b. Hadist
According to Al-Quran and Hadist, in principle all fiqh experts agree that the
musharaka law is changing. and this is still a dispute until now.

Rukun And Syariah Provisions In Musyarakah Agreement

1. Elements that must exist in the musyarakah contract are 4:
a. Actors consist of partners
b. Musyarakah objects in the form of capital and work
c. Ijab qabul
d. Profit ratio (profit sharing)
2. Sharia provisions
a. Actor: partner must be competent in law and baligh
b. Musyarakah objects must: In two form such

END OF THE AKAD MUSYARAKAH

a. If one party stops the contract
b. One of the partners died or disappeared. In this case it can be replaced by heirs if
approved by other partners.
c. Musharaka capital is gone
Punab

4. DETERMINATION OF NISBAH IN THE MUSYARAKAH AKAD

Ratio can be determined in two ways, namely:
1. Proportional profit sharing according to capital
In this way, profits must be shared among the partners proportionally according to the
capital paid, regardless of whether the number of jobs carried out by the partners is the
same or not the same.
2. Profit distribution is not proportional to capital
In this way, the determination of the ratio considered is not only the capital paid, but
also the responsibility, experience, competence or longer working time.

5. ACCOUNTING FOR MUSYARAKAH

The accounting treatment for musyarakah transactions will be seen from two sides of
the actors, namely active partners and passive partners. Active partners are those who
manage the musharaka business, either managing themselves or appointing other
parties to manage on their behalf, while passive partners are those who do not
participate in managing the business (usually financial institutions).
An active partner is the party who responsible for managing it. so that he has obligate to
provide and create the accounting records.
Here the summary of chart of account.
Accounting for Active Partner
1. Declaration of Musyarakah Investment
Musyarakah investments are recognized when cash or non-cash assets are delivered
for a musharaka business.

2. (pra-akad)
Recording when active partners issue pre-contract fees:
Dr. Advance agreement /prepaid xxx
Cr. Cash xxx

 If other partners agree this fee is considered as part

musyarakah investment :
Dr. Musyarakah investment xxx
Cr. Advance agreement/ Prepaid Agreement xxx
 If other partners do not agree, this fee is considered a part of musyarakah
investment :
Dr. Musyarakah Expense xxx
Cr. Advance agreement/prepaid agreement xxx

3. Measurement of Musyarakah investment

a) If the investment in cash will be valued at the amount submitted; and note:
Dr. Musyarakah Investment - Cash xxx
Cr. Cash xxx
 b) if the fair value of non-cash assets submitted is greater than the book value, the
difference will be recorded in the account of the difference in valuation of
musyarakah assets:
fair value > book value /carrying value
the entries :
Dr. Musyarakah investment xxx
Dr. Accumulated Depreciation xxx
Cr. Excess of cost over book value xxx
in valuation of musyarakah assets
(part of equity)
Cr. Non cash assets /Fixed Assets xxx

Record of amortization of asset valuation differences

musyarakah are as follows:
Dr. Excess of cost over book value xxx
in valuation of musyarakah assets
(part of equity)
Cr profit/gain in excess of xxx
Valuation of musyarakah asset

c) if the fair value of non-cash assets submitted is less than the book value, the
difference(excess) is recorded as a loss:
fair value < book value
Dr. Musyarakah investment xxx
Dr. Accumulated Depreciation xxx
Dr. Loss in excess of valuation xxx
Cr. Non cash assets xxx

d) If the investment in the form of non-cash assets and at the end of the contract will
be received back then the non-musyarakah assets will be depreciated based on the
fair value.
Dr. Depreciation Expenses xxx
Cr. Accumulated Depreciation xxx

4. If profit from the musharaka investment is obtained, the journal is:

Dr. Cash / Receivables xxx
Cr. Musharaka investment income xxx

If the investment is made a loss,

journal:
Dr. Loss of Musyarakah investment xxx
Cr. Allowance for Losses xxx
For musyarakah investment
5. If the investment capital submitted is in the form of non-cash assets, and the end of the
contract is returned in cash in the amount of the fair value of the non-cash asset agreed
upon when the asset is delivered. When the musyarakah contract ends, the non-cash
asset will be liquidated / sold in advance and the profit or loss from the sale of this asset
(the difference between the book value and the selling value) is distributed to each
partner as agreed.
If there is no allowance for losses and the sale of non-cash assets makes a profit;
Dr. Cash xxx
Cr. Musyarakah investment xxx
Cr. Profit/Gain of musyarakah investment xxx
If there is an allowance for loss and sale of assets
non-profit makes a profit:
Dr. Cash xxx
Dr. Allowance for Losses xxx
Cr. Musyarakah investment xxx
Cr. Gain/profit xxx

Recording at the end of the contract:

a. If the investment capital submitted is in the form of cash:
No loss, Journal:
Dr. Cash xxx
Cr. Musyarakah investment xxx
there is a loss, journal:
Dr. Cash xxx
Dr. Allowance for losses xxx
Cr. Musyarakah investment xxx

b. If the investment capital is a non-cash asset, and is returned in the form of the same
non-cash asset at the end of the contract:
No loss
Dr. Cash assets xxx
Cr. Musyarakah investment xxx
 Loss
the company must deposit money in the amount of the loss, the journal:
Dr. Allowance for losses xxx
Cr. Cash xxx
Dr. Non cash assets xxx
Cr. Musyarakah investment xxx

Accounting for Funds Manager.

Active partner will record the accoounting practice here, but in this illustration recording
will be done by third party.
1) Acceptance of musyarakah funds from passive partners or active partners is recognized
as temporary syirkah funds in the amount of:
(a) amount received for receipt in cash, Journal:
Dr. Cash xxx
Cr. Temporary syirkah funds(TSF) xxx

Than for Temporary syirkah funds must be separated (in the form of sub ledger)
between funds originating from active partners or passive partners.
(b) fair value for receipt in the form of non-cash assets,
Dr. Non Cash assets/fixed asset xxx
Cr. Temporary Syirkah Funds xxx
If at the end of the contract the non-cash asset is not returned, the person who
records the depreciation expense is the musyarakah business on the basis of fair
value and depreciated over the contract period or during the economic life. Whereas
if returned, the record of depreciation expense is the partner who surrenders the
non-cash asset as his investment capital.
Dr. Depreciation Expenses xxx
Cr. Accumulated Depreciation xxx

2) Recording for profit sharing for active and passive partners

The manager will recognize income and expenses. Journal :

Dr. Cash / Receivables xxx
Cr. Income / Revenue xxx
When record cost
Dr. Expense xxx
Cr. Cash xxx
Closing entry At the end of period :
Dr. Income/Revenue xxx
Cr. Expense xxx
Cr. Revenue that has not been shared xxx
(liabilities)
The entri when the revenue thas has been shared
Dr. Revenue thas has not been shared xxx
Cr. Cash xxx

closing entries that are presented if there are losses

Dr. Revenue xxx
Dr. Allowance for Losses xxx
Cr. Expense xxx

if it turns out that the loss is due to negligence or mistake of the active partner or business
manager, then the loss is borne by the active partner or manager of the musyarakah
business.then added the journal.
Dr. Receivables-active partner xxx
Cr. Allowances for Losess xxx

3) Recording that record in the end of akad period

a. if and the investment submitted is in the form of cash
Temporary syirkah funds xxx
Cash xxx
Allowance for loss xxx
b. if investment that are not in form of cash but in form of Non cash asset, and at the
end of akad period must be returned back, entries:
Dr. temporary syirkah funds xxx
Cr. non cash asset xxx
if assets should return back and the partner who give that Non cash Asset should
give the money to cover the loss
Cash xxx
Allowance for loss xxx

c. If the investment capital is in the form of non-cash assets, and the end of the
contract is returned in cash, then the non-cash asset must be liquidated / sold first
and the profit or loss from the sale of assets distributed to each partner according to
the agreement. If sales make a profit:
Dr. Cash xxx
Dr. Accumulated Depreciation xxx
Cr. Non cash assets xxx
 Cr. Profit xxx
Profit is closed to temporary syirkah funds
Dr. Profit xxx
Cr. Temporary Syirkah Funds xxx
If the sale results in a loss,;
Dr. Cash xxx
Dr. Accumulated Depreciation xxx
Dr. Allowance for Losses xxx
Cr. Non cash assets xxx

When repayment, assuming there is no allowance for lose from sale of non cash account
loss:
Dr. Temporary Syirkah Funds xxx
Cr. Cash xxx

 When repayment, the assumption is that there is an allowance for losses:

Dr. Temporary Syirkah Funds xxx
Cr. Cash / Obligations xxx
Cr. Allowance for Losses xxx

CONCLUSION
musyarakah contract is a form of cooperation between two parties in running a certain
business with the aim of seeking profit where each party contributes to each other money
and work. based on the type of musyarakah it is divided into musyarakah types based on the
provisions of the syirkah fiqh al uqud and syirkah al milk. while based on its type by psak
divided into permanent musharaka and musyarakah decreases. the implementation of
musyarakh also uses the highest and most valid source of law, namely the quran and hadith.
in its implementation there are also rules that must be obeyed and there are also
cancellation rules from this agreement. for accounting treatment and its application, the
PSAK has stipulated in PSAK No. 106 and AAIFOI FAS No. 4 musyrakah contract.
Question And Solution
➢ On August 1, 2008 Anugrah Gusti LKS agreed to conduct a joint venture
with Amirullah in the textile manufacturing field.
➢ In the joint venture, the following matters have been agreed:
1. Overall Business Capital (syirkah) is Rp. 150,000,000, - where Anugrah Gusti's LKS
receives a portion of capital of Rp. 90,000,000 and the capital proceeds for
Amirullah are Rp. 60,000,000.
2. The duration of the 2-year musyarakah contract and agreed upon by LKS
Anugrah Gusti is only to deposit capital and as business manager is Amirullah.
3. Distribution of business results (ratio), for Anugrah Gusti's LKS of 70% and for
Amirullah 30% of revenue earned (revenue sharing)
4. The business capital that is the portion of Anugrah Gusti's LKS as a passive
partner is Rp. 90,000,000, paid for in the following stages:
a) August 15, 2008 paid in cash Rp.36,000,000
b) August 20, 2008 was handed over non-cash capital, in the form of a
"Yamato" spinning machine in the amount of Rp. 30,000,000
(fairvalue at delivery) with a carrying amount of Rp. 32,500,000 and
c) August 25, 2008 non-cash capital in the form of a "Yanmar" loom
amounting to Rp.24,000,000 (fair value at delivery) with a carrying
value of Rp.18,000,000,
5. Musyarakah capital which is the portion of Amirullah as an active partner is
Rp. 60,000,000, - carried out with the following steps:
a. August 2, 2008 submitted in the form of cash / cash of Rp. 15,000,000
b. August 5, 2008, the "Daitzu brand" knitting machine was handed over for
Rp. 30,000,000 (fair price price) with a carrying value of Rp. 27,600,000
c. On August 10, 2008, the Fujitzu brand "coloring machine" was handed
out for Rp. 15,000,000 (fair price) with a carrying value of Rp. 16,200,000

Pre-Trial Fees (pra akad)

August 5, 2008 is paid for pre-contract expenses, such as making a project feasibility study,
project feasibility research of Rp. 1,000,000, -
Payment Of Pre-Contract Expenses
Db. Msy pre-contract payment Rp. 1,000,000, -
Cr. Cash Rp. 1,000,000
If not agreed upon as musyarakah investment
Db. Contract fee of Rp. 1,000,000, -
Cr. Prepaid/pre-musyarakah contract Rp.1,000,000
If agreed upon as a musharaka investment
Db. Musyarakah investment Rp. 1,000,000, -
Cr. Prepaid pre-contract musyarakah Rp. 1,000,000

Approval Of Musyarakah

On August 1, 2008 when the musyarakah financing was approved and agreed upon
by Amirullah, Asnugrah Gusti's LKS had an obligation in the form of a commitment to
Musyarakah Investment of Rp. 90,000,000, -
Dr. Counter commitment of Msy Investment Rp. 90,000,000
Cr. Investment Commitment Obligation Msy Rp. 90,000,000

Submission of Funds

On August 15, 2008 Anugrah Gusti LKS as a passive partner handed over capital in
cash to Amirullah as a business manager of Rp. 36,000,000, -

Db. Musyarakah investment Rp. 36,000,000, -

Cr. Syirkah Cash / Account Rp. 36,000,000, -

Dr. Obligations of Musy's Investment Commitment. Rp. 36,000,000, -

Cr. Cons commitment of Msy Rp.36,000,000

Submission Of Non-Cash Capital

August 20, 2008 Anugrah Gusti's LKS hands over non-cash / asset capital in the form
of a "Yamato" spinning machine with a value of Rp. 30,000,000 (fair value at
delivery)
For the delivery of non-cash / asset capital
Musyarakah investment Rp. 30,000,000, -
Msy Inventory / Assets Rp. 30,000,000, -

Fair value < book value (recorded Rp. 32.500.000,-)

Musyarakah Investment Rp. 30.000.000,-
Loss of surrender of Musy. Asset Rp. 2.500.000
Inventory /asset musyarakah Rp.32.500.000
Obligation of Invst Musy Commitment Rp. 30.000.000,-
Contra of Msy's investment commitment Rp. 30.000.000,-
 Fair value> carrying value (recorded Rp. 24,000,000)
Musyarakah investment Rp. 24,000,000
Msy Inventory / Assets Rp. 18,000,000
Gain of Deferred Msy Rp. 6,000,000
Obligation of Invst Msy Commitment Rp. 24,000,000
Counter Investments Commitment Msy Rp. 24,000,000

Amortization of deferred musyarakah profits

Gain of Deferred Msy Rp. 250,000
Gain of Msy Asset transferr Rp. 250,000
(6,000,000: 24 = Rp. 250,000, -)

Depreciation of non-cash capital

(a). capital in the form of non cash in the form of:

"Yamato" spinning machine Rp. 30,000,000
"Yanmar" weaving machine Rp. 24,000,000 +
Amount of non-cash capital musyarakah Rp 54.000.000

(b) Duration of musyarakah contract for 24 months, => depreciation:

"Yamato" spinning machines: (30,000,000 - 0) / 24 = Rp. 1.250.000
"Yanmar" weaving machines: (24,000,000 - 0) / 24 = Rp. 1.000.000 +
Amount Of Decreasing Value Of Depreciation 2.250.000

Journal
(a). Depreciation of the "Yamato" spinning machine
Depreciation Expense Rp. 1,250,000
Accumulated depreciation Rp. 1,250,000

(b). Depreciation of the "Yanmar" weaving machine

Depreciation Expense Rp. 1,000,000
Accumulated depreciation Rp. 1,000.000

Provide in Balance Sheet

ASSETS
Musyrakah investment
Musyarakah investment (cash) 36,000,000
Musyarakah investment (non-cash) 54,000,000
Accumulated decrease in value (2,250,000)
Deferred Msy Benefits (5,750,000)
 MEASUREMENT OF MUSYARAKAH INVESTMENT
Capital musyarakah non cash initial contract:
"Yamato" spinning machine Rp. 30,000,000
"Yanmar" weaving machine Rp. 24,000,000 +
Amount of non-cash capital musyarakah Rp. 54,000,000

Decrease in value (non-cash capital depreciation):

"Yamato" spinning machine Rp. 1,250,000
"Yanmar" weaving machine Rp. 1,000,000 +
Total depreciation expense of Rp. 2,250,000
Amortization of deferred profits/revenue Rp. 250.000 -

Amount of deduction of investment value Rp. 2,000,000 +

Rp. 52,000,000
Loss of musyarakah investment (if any) (Rp. ---- ) +
Net value of non-cash musyarakah investment (end) Rp. 52,000,000

NET PROFIT SHARING OF Musyarakah Contract.

Musyarakah revenue sharing (for example) Rp.5.000.000

Decrease in the value of musyarakah asset Rp. 2,250,000
Amortization of deferred profits Rp. 250.000 -
Rp.2,000,000.
Loss of Musyarakah Investment Rp. 0

The net proceeds of musyarakah investment Rp. 3,000,000, -

Musyarakah investment income distributed to investors

 Transfer of cash capital
August 25, 2010 received by Anugrah Gusti LKS for the return of musyarakah capital of
Rp.36,000,000, - from Amirullah as the active partner of the manager
Db Cash / Syirkah Account Rp. 36,000,000
Cr Musyarakah Investment Rp. 36,000,000
Returning non-cash capital
(Fair Value < book value )
Towards the end of the musyarakah contract, LKS Anugrah Gusti as a passive partner
received back from Amirullah as an active management partner, non-cash capital
musyarakah in the form of a "Yamato" spinning machine, fair value at the delivery of
Rp.500,000
with book value / recorded as follows:

The acquisition value of the "Yamato" spinning machine Rp. 30,000,000,

Accumulated depreciation (up to 23rd month) Rp. 28,750,000, -
Book value (recorded) non-cash capital / musyarakah assets Rp. 1,250,000, -

Dr. Msy Inventory / Assets Rp. 500,000

Dr. Accumulated depreciation of Rp. 28,750,000
Dr. Loss of Returned Aset Msy Rp. 750,000
Cr. Msy (non-cash) investment Rp. 30,000,000

Returning non-cash capital

(fair value > book value )
Towards the end of the musyarakah contract, LKS Anugrah Gusti as a passive partner
received back from Amirullah as an active partner manager, non cash cash musyarakah in
the form of a "Yanmar" weaving machine with fair value when the receipt was Rp.
2,500,000. While the carrying value of the "Yanmar" looms is as follows:

The acquisition value of the "Yanmar" weaving machine Rp. 24,000,000

Accumulated depreciation (up to 23rd month) Rp. 23,000,000 -
Book value (recorded) non-cash capital / musyarakah assets Rp. 1,000,000
 Dr. Assets of Rp. 2,500,000, -
Dr. Accumulated depreciation of Rp. 23,000,000, -
Cr. Benefits of Ms. Msy Assets Rp. 1,500,000,
Cr. Musyarakah investment Rp. 24,000,000, -

Non cash cash capital ("Yamato" spinning machine)

Fair value at delivery "Rp. 30,000,000
Decrease in value (depreciation of non-cash capital)
Accumulated Depreciation (up to 23 months) Rp. 28,750,000
Amortization of deferred profits (Rp. 00, -) -
Amount of deduction of investment value Rp. 28,750,000,
Rp. 1,250,000 -
Loss of return on musyarakah assets Rp. 750,000,
Net value of musyarakah investment Rp. 500,000,

Non cash cash musharaka ("Yanmar" weaving machine):

Fair value when submitting Rp. 24,000,000,
Decrease in value (depreciation of non-cash capital):
Accumulated depreciation (up to 23 months) Rp. 23,000,000,
Amortization of deferred profits (Rp 6,000,000)
Amount of deduction of investment value Rp. 17.00,000
Rp. 7,000,000,
Benefits of returning musyarakah assets Rp. 1,500,000,
Net value of musyarakah investment Rp. 8,500,000,
NET PROFIT SHARING OF Musyarakah Contract.

Musyarakah revenue sharing (for example) Rp. 5,000,000,

Addition:
Benefits of msy return on assets of Rp. 1,500,000,
Deduction:
Decrease in value of musyarakah assets Rp. 2,250,000,
Amortization of deferred profits (Rp. 250,000)
Asset loss of Rp. 750,000, -
Rp. 2,000,000, -
Loss of msy investment (for example) Rp. 0, -

Amount of deduction (Rp. 2,000,000)

The net proceeds of musyarakah investment Rp. 4,500,000
Reference
https://izzanizza.wordpress.com/2012/04/05/pengertian-musyarakah-dari-buku-akuntansi-
perbankan-syariah-di-indonesia/
Hammâd, Nezih, (1996). İktisâdı ̂ Fıkıh Terimleri (trc: Recep Ulusoy), İstanbul.
Nurhayati,Sri,Wasilah,(2015).akuntansi syariah.Jakarta: salemba empat.