Accrual Incentive Fees Journal Entry

 

When Incentive Fees is not paid and services received from investment manager, then it is the company’s obligation to pay to investment manager for the services rendered during the period. In that an Accrued Incentive Fees Account is created to record any incentive fees not paid in cash. This account is closed when the company fully paid the amount of payment to investment manager.

The adjusting entry of accrued incentive fees is shown below:

 

                              Incentives Fees a/c  XXX

 

                                                             Accrued Incentive Fees a/c  XXX

 

                                           (Incentives Fees Accrued for the Period)

Accrual Incentive Fees or Accrued Incentive Fees is recorded as a current liability on Liabilities & Equity side of balance sheet.

Accrued Incentives Fees is also known as Accrued Performance Fees in accounting.

Other names for incentive fees are Outstanding Incentives Fees and Incentive Fees Payable.