In the Adjust Equity Method Position panel, you can process a cost adjustment for a single position that uses the equity method of accounting when new partners are admitted to a partnership and there is financial impact. You can adjust a common stock or Joint Venture/Limited Liability/Partnership security. When When new partners are admitted to a partnership, this transaction allows you to record Unrealized Income Loss (STAT treatment) or Undistributed Investment Income/Loss (Other treatment) per lot based on regulatory requirements. You must enter a separate transaction for each accounting basis where you want to adjust the cost.
The Adjust Equity Method Position panel differs from the cost adjustment panels that you use to process positions that do not use the equity method of accounting. If any accounting basis for a position uses the equity method of accounting, you must use the Adjust Equity Method Position panel to adjust the position for a new partner added.
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This article assumes you are familiar with the entity and security level elections that have been made for processing a common stock or Joint Venture/Limited Liability/Partnership security when you use the equity method of accounting. |
To adjust cost for a new partner added for a position that uses the equity method of accounting:
- In Accounting Center, in the left navigation pane, click Transactions > Equity Method > Adjust Equity Method Position.
You see the Adjust Equity Method Position panel. - Under Entity Information, select the entity and accounting basis where you are adjusting the position.
You must select an entity that has at least one accounting basis with an EMA Treatment of Other or STAT assigned. - Under Issue Information, select the security associated with the position you are adjusting.
- Under Accounting Information, enter the effective date, accounting date, and settlement date for the adjustment.
- Under Adjustment Information, click Adjustment Type and select New Partner Added.
- Click the New Partner: Resulting Gain/Loss box and select either Income/Gain or Loss.
- Specify the amount of the gain/loss for the adjustment transaction. You can define the:
- Undistributed Investment Income Local value for a basis with an EMA Treatment of Other.
- Undistributed Investment Loss Local value for a basis with an EMA Treatment of Other.
- Unrealized Undistributed Income Local value for a basis with an EMA Treatment of STAT.
- Unrealized Undistributed Loss Local value for a basis with an EMA Treatment of STAT. - Complete the remaining options on the Adjust Equity Method Position panel.
You can define the FX Rate to set the base amount for foreign securities.. - Click Submit.
The system books an adjustment with an EMAADJUST event and a reason code of EMANEWPART. It allocates the adjustment pro-rata across all open lots based on lot quantity / position quantity as of the trade date of the adjustment..