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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121565  
Subject: Re: Question On Investment Partnership Accountin Date: 6/17/2014 6:31 PM
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Hi, I’m trying to learn about investment partnership accounting and was wondering if someone might be some expertise in this area.

How should the NAV of a partnership share be calculated to stay fair to partners if they buy or sell at different times? With a tax accrual I’d think? Anything else? Does this get really complicated?

Is anything be done regarding highwater marks if someone joins the fund when there’s currently a shortfall? I.e. Performance is owed to old partners but not to the new one.

Any good articles or resources are welcome too, thanks.


If you're talking about an investment club where the partnership invests in stocks then you want to look at bivio.com and/or myiclub.com for accounting software. Both provide tutorials and free trials. Better Investing (betterinvesting.org) and InvestEd (investEd.org) are national non-profit organizations that provides educational resources for investment clubs.

In general, the accounting is similar (but not identical) to mutual fund accounting. Each contribution of funds to the partnership buys units at the current NAV. The NAV is recalculated in accordance with the partnership agreement which should set the time and manner for determining the NAV. The partnership agreement can specify how income/expenses are allocated to the partners. The most common method is to allocate these items equally to each unit outstanding on that date. This means that the partners with larger ownership shares (more units) get more of the income/expense.

Ira
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