Handbook: Investment companies

From private hedge funds to mutual funds, investment companies continue to evolve in both form and complexity. While all investment companies share a common objective – generating returns for investors through capital appreciation, investment income, or both – their legal structures, investment strategies, and portfolios are increasingly diverse. As a result, applying investment company accounting often requires careful judgment and a nuanced understanding of both an entity’s purpose and its activities.

Investment company accounting sits at the intersection of the industry-specific guidance of ASC 946, broader US GAAP and an expanding body of guidance from regulatory authorities and professional associations. In practice, entities often must determine not only what guidance applies, but whether that guidance applies at all – particularly when investment structures fall outside traditional models or when only certain elements of ASC 946 are relevant to a given fact pattern.

This Handbook provides a practical roadmap through that complexity, explaining when and how to apply that guidance to each type of investment fund. It provides an in-depth look at the broad and often complex issues related to assessing investment company status, recognizing and measuring investments, and presenting and disclosing financial information in a manner that is decision-useful to investors.

Further, it includes examples demonstrating how the standards apply to common scenarios faced by the asset management industry.