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If the loss quantity is greater than the unamortized discount then the system applies the remaining quantity as a reduction to the accumulated deferred market discount. This amount is stored on the open lot (Prior Deferred Amort Reduction Local/Base).
If the loss quantity is greater than the total unamortized discount and accumulated total deferred market discount, the lot will be at par before applying the remaining par quantity. The system applies the remaining quantity to cost and Short Term Loss. This amount is stored on the open lot (Prior Cost Reduction Local/Base).
Once the system applies the principal loss factor and reduces the appropriate quantity (and deferred market discount and cost when applicable), the system applies the cash portion of the paydown to the position in the manner described in the prior Recognition of Income Examples section.
Unamortized Market Discount (Mkt Dis) is not a stored value in Eagle but is displayed as a balance in the example below for illustrative purposes.
Loss Factor is Less Than the Amount of Unamortized Discount
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In this scenario, the system applies full unit reduction as a decrease in quantity and there is no impact to the remaining amount of deferred market discount.
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In this scenario, the system applies loss factor as a reduction of quantity and reduced reduces deferred market discount for the amount of loss factor that is greater than the unamortized discount.
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Prior Cost Reduction | Prior Def Mkt Discount Reduction |
5,000 | 15,000 |
Loss Recovery - Continuation of Previous Example
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Recovery factor reverses prior losses, then increases the deferred market discount by the remaining recovery amount.
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