Methodological Problems of Accounting for Carried Interest and Waterfall Distributions in Investment Funds
DOI:
https://doi.org/10.37547/ijmef/Volume05Issue12-12Keywords:
Carried interest, waterfall, private equityAbstract
This article systematizes the main issues: the boundaries of the accounting object (fund vs. management company), the moment of recognition and assessment of carry as variable compensation/profit share, the impact of waterfall conditions (deal-by-deal vs whole-of-fund, preferred (Return, catch-up, escrow, cla wback) on accruals, classification of liabilities and capital instruments, comparability of financial statements, and control procedures. Based on the requirements of IFRS (IFRS 10, IAS 32, IFRS 15) and practice-oriented guidance (AICPA, KPMG, PwC, EY, ILPA), a set of methodological principles for developing accounting policies and disclosures is proposed.
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