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For this scenario the Entity (STARENT) has just one accounting basis (USTAX). Positions held as STAR method process as they traditionally do in the system, as "fair value" instruments. You can and should use core STAR unrealized gain/loss processing for any pricing and valuation of the security. The one manual process you need is processing Return of Capital/Return of Income. In a multi-basis portfolio that holds positions both as Equity Method and STAR Method, you need to manually enter income and capital distributions. In that case the system accounts for STAR entries as follows.
Distribution Scenario
Distributions may come in the form of cash (Return of Capital) and/or investment income (Return of Income), which are both allocated pro-rata to the lot level.
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Finally, the ledger entries for this transaction follow. Accounts added to support the use of the equity method of accounting appear in
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Account | Account | Debit | Credit |
|---|---|---|---|
1010000100 | COST OF INVESTMENTS | 0.00 | 7,000.00 |
1002000100 | INVESTMENT RECEIVABLE | 10,000.00 | 0.00 |
4001000108 | INVESTMENT INCOME | 0.00 | 3,000.00 |
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