Accounting treatment
What a holder books, and where the figures come from.
CARA7 does not provide accounting, tax or legal advice. Classification and measurement depend on the holder's reporting framework and jurisdiction, and on the holder's own business model for the instrument. This page describes what the instrument is and what data the platform produces, so that the holder's advisers have what they need.
What the instrument is
A note is a debt security. It has a fixed original face value, a contractual coupon on its outstanding nominal, a defined rank, and a nominal that amortizes to zero. It is not a unit in a fund and it carries no net asset value.
That distinction is the whole of this page. In a fund wrapper, value accrues into the unit price and a redemption returns capital and income in one undivided amount, which the holder then has to decompose. A note pays a coupon and repays principal as two separate, contractually distinct flows.
What you receive, already split
Every payment date settles two amounts to the holder, and the platform records them separately for the life of the position:
| Interest | Accrued on the outstanding nominal, actual/360, at the class coupon |
| Principal | Repayment of nominal, reducing the note factor |
Return of capital is never mixed with return on capital. The holder does not have to apportion anything, and two holders of the same class never have to agree on how a payment was split.
Where the figures come from
Per holder, at any time, without a request:
| Figure | Use |
|---|---|
| Notes held and original face | Cost basis at par for a subscriber |
| Note factor | Outstanding nominal per note |
| Outstanding claim | Carrying nominal of the position |
| Interest received, cumulative | Income recognised to date |
| Principal received, cumulative | Capital returned to date |
| Accrued interest, current period | Accrual at a reporting date |
| Payment history, per payment date | Support for each entry |
The API reference documents the endpoints, and the investor dashboard shows the same figures. Both carry the settlement reference for each payment, which is what an auditor asks for.
Valuation
There is no observable market price. Two references exist and neither is a valuation:
- Outstanding nominal, being notes held times the note factor times the denomination. This is the contractual amount still owed.
- Amortized cost, computed by the holder from the acquisition price, the coupon and the expected repayment profile.
A holder acquiring notes on the secondary market has a cost basis known only to them, so the platform does not compute a gain or loss on such a position. It reports the contractual figures.
Mid-period acquisitions
Buy or sell notes between payment dates and the coupon for that period is apportioned to the day between seller and buyer, and settled to each at the next payment date. Principal goes in full to the holder of record at the period end.
Both sides therefore receive exactly the income attributable to their holding period, without an accrued-interest convention to negotiate at the trade and without a manual adjustment afterwards.
Impairment and shortfalls
Interest that cannot be paid at a payment date is recorded as a shortfall against the class and paid at the next opportunity, ahead of the same rank. A shortfall is a deferral, not a write-off, and does not itself bear interest.
Shortfalls are published per class and per payment date, so the holder's expected credit loss assessment has the actual record rather than an inference from a missed transfer.
Reporting dates that fall inside a period
Accrued interest for the current period is published continuously, computed on the outstanding nominal on the same actual/360 basis as the payment. A holder closing at any date has the accrual for that date without waiting for the payment date or estimating it.
Withholding and tax
CARA7 operates no withholding and produces no tax certificate. The instrument pays interest and repays principal; the treatment of each depends on the holder's residence and status, and on the jurisdiction of the issuer for a given series.
Holders should take their own advice. The data above is what their advisers will ask for, and it is available for the whole life of the position.