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Dealing with real estate investment partners and distributing profits




In the previous article   (accounting guidance for real estate investment step by step )

we find that the residential complex of October project achieved a profit of 100,000 pounds

 difference between the value of sales and the cost of sales 480000 - 380000 = 100,000 pounds


The question now is how to distribute 100 thousand profits between the partners of the project, which are 3 partners ?

(are Eng. Mansour El Sherbiny profit rate 30% - Babel Investment Company 40% in addition to the management rate of 10% of the value of profits - D. Mahmoud Ghazi 30%)


The first step

 is to open accounts in the accounting directory by the names of the shareholders from the list of cards - the shareholders' card as shown in the figure and register the names of the shareholders and the capital shown is the total capital of the company as a whole and a share is allocated for each project in which the shareholder

 

The second step

of the General Accounts - Internal Audit - Partner Data Register the detailed partner data from the value of the cash or eye money and the agreed profit rate as shown on the screen below



The third step

OF THE REAL ESTATE INVESTMENT REPORTS SALES REPORTS There are 2 reports of the profit distribution:-

  1. report between the partners according to the working capital 
  2. the report of the distribution of profits between the shareholders according to the agreed rates and ignoring the value of the capital.

 However, the profit rate is supposed to be the same as in the capital


Distribution of profits between the shareholders according to the capital plus 10% of the total management of the distributor 100 thousand

Distribution of profits between the shareholders according to the capital plus 10% of the total management of the distributor 100 thousand


Another way to deal with the contributor is the direct method of being a shareholder in every financial transaction

The partnership in real estate investment projects is more difficult than partnership in other projects within the company. The accountant must take into account several points that:- 

  • the long-term investment projects in the implementation, which require financing on a continuous basis and the partner must be asked for the amounts required to be paid every period. 
  • At the end of the project and the completion and sale of all units 
  •  the payments received in advance from the customers and how to deal with them 
  • the possibility of partner withdrawal at any time 
  •  the purchase of a partner for a residential unit and many considerations will be clear during the explanation

The course of accounts in the case of direct method

  1.  Registration of partner data and the percentage of each partner
  2. Receipt of the share of the partner or part thereof, whether in cash or blind
  3.  Proving the purchase of the land, for example, intended for the construction of the residential complex and the benefit of the shareholder by its share
  4.  Proof of expenses on the project and load the shareholder share in the expenses by the end of each period
  5. Prove the payments received in advance from the customers and prove the shareholder's entitlement to his share in the amount collected
  6. Prove the sale of the unit to the customer and prove the shareholder's entitlement to his share
  7.  Follow-up to the account of the shareholder and his demand for payment or payment of part of his entitlements
  8.  Liquidation of profits of the project and distribution of profits in cash or in the form of units

The accounting guidelines are being added in the above cases

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