Private Equity & Investment Funds Knowledge Center
Explore our verified library of Private Equity & Investment Funds transactions. Every entry is reviewed for IFRS compliance and real-world accuracy by our technical accounting team.
How to Record a Capital Call and LP Funding Receipt
Recording the receipt of called capital from Limited Partners in response to a capital call notice issued by the General Partner to fund a new portfolio investment or fund expenses.
How to Record Capital Call Proceeds Deployed into a Portfolio Investment
Recording the deployment of called capital into a new or follow-on portfolio company investment (equity purchase or loan), funded directly from LP capital call proceeds.
How to Accrue a Management Fee and Apply the GP Portfolio Company Fee Offset
Accruing the periodic management fee owed to the GP and applying the LPA-specified monitoring and transaction fee offset to reduce the net management fee charged to LPs.
How to Record a Fair Value Mark-to-Market Unrealized Gain on a Portfolio Investment
Recording the quarterly or annual fair value adjustment on a private equity portfolio company investment under ASC 820, resulting in an unrealized gain flowing through the fund's income statement.
How to Record a Fair Value Write-Down and Unrealized Loss on a Portfolio Investment
Recording a downward fair value adjustment on a portfolio investment reflecting deteriorating company performance, market multiple compression, or credit distress.
How to Record a GP/LP Distribution as a Pre-Hurdle Return of Capital
Recording a distribution to LPs representing a return of invested capital from a portfolio company exit or recapitalization proceeds, before any carried interest or performance fee threshold has been met.
How to Record a Carried Interest Distribution Through the Waterfall
Recording the GP's carried interest distribution after LPs have received their full capital return and preferred return, representing the GP's 20% profit share on investment gains.
How to Accrue a GP Clawback Obligation as a Contingent Liability
Recognizing a contingent clawback liability for the GP when early carried interest distributions may need to be returned to LPs due to subsequent underperforming investments causing the overall fund IRR to fall below the preferred return hurdle.
How to Record a Subscription Credit Facility Drawdown to Fund a Portfolio Investment
Recording a drawdown on the fund's subscription credit facility used to fund a portfolio investment before a formal capital call is issued to LPs.
How to Record a Realized Gain on a Portfolio Company Exit
Recording the full disposal of a portfolio company investment via M&A sale, IPO secondary, or recapitalization, recognizing the realized gain as the difference between total exit proceeds and the investment's cost basis.
How to Capitalize Fund Formation and Organizational Costs
Recording legal, registration, and structuring costs incurred during the formation of a new private equity fund prior to the first closing.
How to Amortize Capitalized Fund Organizational Costs Monthly
Recording the monthly amortization of capitalized fund organizational costs over the elected amortization period.
How to Record a Placement Agent Fee on Fund Raise Capital Commitments
Recording the placement agent fee paid to third-party capital raisers upon closing of LP commitments, typically 1%–2% of committed capital raised.
How to Record the First Closing LP Commitment Register and Equalization Payment
Recording the equalization payment required from LPs joining at a subsequent closing to place them on equal economic footing with first-closing LPs, including interest on prior capital calls.
How to Record an LP Capital Call Default and LPA Penalties
Handling a delinquent investor? Here is how private equity funds record a capital call default and execute LPA penalty provisions in the ledger.
How to Record a Non-Defaulting LP Shortfall Funding After an LP Default
Recording the additional capital call issued to non-defaulting LPs to cover the shortfall created by a defaulting LP, as permitted under the LPA.
How to Record Recycled Capital Reinvested from Early Exit Proceeds
Recording the reinvestment of early exit proceeds or dividend recap proceeds back into new portfolio investments within the investment period, as permitted by the LPA recycling provision.
How to Expense Broken Deal Costs on a Failed Portfolio Investment Transaction
Expensing due diligence, legal, and advisory costs incurred on a potential portfolio investment that did not close.
How to Record Fund Operating Expenses for Audit, Legal and Fund Administration
Recording recurring fund-level operating expenses including annual audit fees, fund counsel legal fees, fund administrator fees, and D&O insurance premiums.
How to Accrue the LP Preferred Return Hurdle Rate Each Quarter
Accruing the LP preferred return (typically 8% per annum) on contributed capital for purposes of tracking the hurdle threshold that must be cleared before the GP earns carried interest.
How to Record the Management Fee Step-Down After the Investment Period Ends
Recording the reduction in management fee basis when the fund transitions from the investment period (fee on committed capital) to the post-investment period (fee on invested cost basis of remaining portfolio).
How to Record a Management Fee Waiver in Exchange for a GP Profits Interest
Recording the reduction of management fees when the GP elects to waive fees in exchange for a profits interest or co-investment right, a common tax-efficient structuring technique.
How to Record the Repayment of a Subscription Credit Facility via LP Capital Call
Recording the repayment of the subscription line of credit using proceeds from the LP capital call issued to fund the facility repayment.
How to Record a NAV-Based Credit Facility Drawdown for LP Liquidity
Recording a drawdown on a NAV-based credit facility secured against the fair value of the fund's portfolio, used to provide LP liquidity or fund follow-on investments in a mature fund.
How to Record Management Fee Revenue at the GP Management Company Level
Recording management fee revenue at the GP management company entity (separate from the fund) when it receives the net management fee from the fund it manages.
How to Record a Co-Investment Where LPs Invest Directly Alongside the Fund
Recording the fund's allocated share of a portfolio company investment where select LPs are also investing directly alongside the fund in a separate co-investment vehicle.
How to Set Up a No-Fee No-Carry Co-Investment SPV and Record LP Capital Contributions
Recording the initial LP capital contribution into a standalone co-investment special purpose vehicle that charges zero management fee and zero carried interest, investing alongside the main fund.
How to Segregate an Illiquid or Hard-to-Value Asset into a Side Pocket
Recording the transfer of a portfolio investment into a side pocket structure to ring-fence an illiquid or special asset from the main fund's liquid portfolio.
How to Record an LP Interest Transfer in the Secondary Market
Recording the sale of an LP's fund interest to a secondary buyer from the fund's perspective — updating the LP register without any cash moving through the fund.
How to Record a GP-Led Secondary Restructuring into a Continuation Fund
Recording the transfer of select portfolio assets from an existing fund into a new continuation vehicle, where existing LPs can cash out or roll into the new vehicle.
How to Record a Direct Lending Unitranche Loan Investment Including OID
Recording the origination of a unitranche senior secured loan to a middle-market portfolio company by a credit-focused PE fund or Business Development Company, net of original issue discount.
How to Accrue PIK Payment-in-Kind Interest Income on a Portfolio Company Loan
Accruing PIK interest on a portfolio company loan where interest is added to the principal balance rather than paid in cash, increasing the loan's face amount.
How to Bifurcate a Mezzanine Loan Investment with Equity Warrant Coverage
Recording a mezzanine loan investment where the fund receives equity warrants as additional compensation, requiring bifurcation of the proceeds between the debt and warrant components.
How to Accrue PIK Dividends on a Preferred Equity Investment in a Portfolio Company
Recording the quarterly accrual of cumulative PIK dividends on a preferred equity investment, increasing the liquidation preference and recorded investment value.
How to Record Dividend Recapitalization Proceeds Received by the Fund
Recording the receipt of a special dividend from a portfolio company funded by new third-party debt at the portfolio company level, returning capital to the fund without a full exit.
How to Set Up a Blocker Corporation for Tax-Exempt and Foreign LPs
Recording the capitalization of a blocker C-Corp interposed between the fund and a portfolio company to shield tax-exempt and foreign LPs from UBTI and FDAP income.
How to Accrue Corporate Income Tax at the Blocker Corporation Level
Recording the corporate income tax accrual at the blocker corporation level on operating income earned from the portfolio investment held by the blocker.
How to Withhold and Record US Tax on Distributions to Foreign LPs Under FIRPTA and FDAP
Recording the withholding of US federal tax on distributions to foreign LPs under FIRPTA or FDAP rules, remitting the withheld amount to the IRS.
How to Record a Fund of Funds Investment in an Underlying PE Fund
Recording an investment made by a fund of funds vehicle into an underlying PE fund as a Limited Partner, with look-through treatment for financial reporting.
How to Accrue and Disclose the Double Fee Layer in a Fund of Funds Structure
Recording the FoF-level management fee in addition to the underlying fund fees, and preparing the required disclosure of the total fee load borne by FoF investors.
How to Record a Distressed Debt Investment Purchased at a Discount to Par
Recording the purchase of a distressed portfolio company's debt securities at a significant discount to face value, with intent to recover par through restructuring or convert to equity.
How to Record a Distressed Debt-to-Equity Conversion in a Portfolio Company Restructuring
Recording the conversion of distressed debt holdings into equity of the reorganized portfolio company pursuant to a Chapter 11 plan of reorganization or out-of-court restructuring.
How to Record a Full Write-Off of a Portfolio Company Investment as a Total Loss
Recording the complete write-off of a portfolio company investment to zero upon bankruptcy filing, liquidation, or determination that the investment has no remaining recoverable value.
How to Record an FX Forward Contract to Hedge a EUR-Denominated Portfolio Investment
Recording a forward foreign exchange contract entered into by the fund to hedge USD/EUR currency risk on a European portfolio company investment denominated in Euros.
How to Record Foreign Currency Translation on a EUR-Denominated Portfolio Investment
Recording the foreign currency translation adjustment on a EUR-denominated portfolio company investment when converting to the fund's USD functional currency at period end.
How to Record an In-Kind Distribution of Public Stock to LPs After an IPO Lock-Up
Recording the distribution of publicly traded shares received via IPO lock-up expiration directly to LPs in-kind rather than selling and distributing cash.
How to Record an M&A Exit Escrow Holdback Receivable for Rep and Warranty Claims
Recording the portion of M&A exit proceeds held in escrow pending satisfaction of representations and warranties, recorded as a contingent receivable at estimated fair value.
How to Record the Release of M&A Exit Escrow Proceeds and True-Up the Receivable
Recording the release of M&A escrow proceeds upon expiration of the rep and warranty period, with recognition of the difference between estimated and actual amounts received.
How to Record an Earnout Payment Received from a Portfolio Company Acquirer
Recording the receipt of an earnout payment from the acquirer of a portfolio company, triggered when the portfolio company achieves agreed post-closing performance milestones.
How to Record Carried Interest Allocation to the GP Carry Vehicle
Recording the carried interest allocation to the separate GP carry vehicle at the fund level, representing the GP's accrued economic entitlement to future profits distributions.
How to Record the General Partner's Own Capital Commitment to the Fund
Recording the GP's mandatory co-investment (typically 1%–3% of total fund commitments) contributed alongside LP capital to align incentives.
How to Record a Follow-On Add-On Acquisition Investment into a Portfolio Company
Recording a follow-on capital contribution to a portfolio company to fund its acquisition of a smaller add-on company as part of a buy-and-build strategy.
How to Record a Cross-Fund Co-Investment Between Two Funds Managed by the Same GP
Recording an investment made jointly by Fund III and Fund IV managed by the same GP in the same portfolio company, requiring careful allocation and conflicts of interest documentation.
How to Record a Short-Term Bridge Loan Extended by the Fund to a Portfolio Company
Recording a short-term bridge loan extended by the PE fund directly to a portfolio company to cover an immediate capital need pending closing of permanent financing.
How to Record a Distribution Recall Requiring LPs to Return Capital for Reinvestment
Recording the recall of a previously distributed amount from LPs to fund a new investment, as permitted by the LPA's distribution recall provision.
How to Calculate Quarterly NAV and Prepare LP Capital Account Statements
Recording all components of the quarterly NAV calculation that flows into each LP's capital account statement, including investment fair value changes, income, expenses, and distributions.
How to Prepare the ILPA Standardized Fee and Expense Disclosure Report
Preparing the ILPA standardized fee and expense reporting template disclosure, reconciling all fees from the fund to the GP management company and portfolio companies.
How to Calculate DPI, RVPI, TVPI and Net IRR for LP Quarterly Reporting
Calculating the standard PE fund performance metrics — DPI, RVPI, TVPI, and Net IRR — used in LP quarterly reporting.
How to Record a Fair Value Mark on a Broadly Syndicated Leveraged Loan (Level 2)
Recording the mark-to-market fair value adjustment on a broadly syndicated leveraged loan held by a credit-focused PE fund, using observable LSTA market prices as Level 2 inputs.
How to Record a SAFE Note Investment in an Early-Stage Portfolio Company
Recording an investment in a SAFE (Simple Agreement for Future Equity) note issued by an early-stage portfolio company, which converts to equity upon a qualifying financing round or exit.
How to Record a SAFE Note Conversion to Preferred Equity at a Series A Round
Recording the conversion of a SAFE note into Series A Preferred Stock upon a qualifying priced round, at the SAFE's valuation cap or discount conversion terms.
How to Record an Infrastructure Fund Investment in a Revenue-Producing Asset
Recording the investment in a revenue-producing infrastructure asset such as a toll road, airport, or utility and establishing the DCF-based fair value framework.
How to Record Operating Distribution Income Received from an Infrastructure Asset
Recording the periodic operating distributions received from an infrastructure portfolio asset such as a quarterly dividend from a utility concession company.
How to Record Oil and Gas Investment Depletion Using the Units-of-Production Method
Recording the depletion allowance on an oil and gas mineral rights or working interest investment held by a natural resources PE fund as reserves are extracted.
How to Release Unused LP Commitments at the End of the Investment Period
Recording the permanent reduction of unfunded LP commitments at investment period end when the GP elects not to call remaining uncommitted capital.
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