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In this example, security ID030287AL0 is purchased with:
Trade Date and Settle Date of 19990710
Price of 101
Original Face of 1,000,000.00
Current Face of 993,541.00
Sinking Fund Factor of 0.99354100
Then:
On July 15, 1999, a sinking payment is processed for 0.045049248, or 45,049.25 Par.
The Life to Date Amortization is - 56.25 (as of 20040714).
Sink Par amount = 45,049.25
(1,000,000.00 Original Face * .045049248)
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If you elect to take Gain/Loss from sinking fund payments, the general ledger entries on 19990715 appear as shown in the following table.
Account Number | Account Name | Debit Amount | Credit Amount |
|---|---|---|---|
1002000100 | Investment Receivable | 45,049.25 | 0.00 |
1010000100 | Cost Of Investments | 0.00 | 45,497.19 |
3006000112 | Realized Loss On Investments Short Term | 447.94 | 0.00 |
Treat Gain/Loss from Sinking Fund Payment as Accelerated Amortization Scenario
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If you elect to take Accelerated Amortization from sinking fund payments, the general ledger entries on 19990715 appear as shown in the following table.
Account Number | Account Name | Debit Amount | Credit Amount |
|---|---|---|---|
1002000100 | Investment Receivable | 45,049.25 | 0.00 |
1010000100 | Cost Of Investments | 0.00 | 45,049.25 |
1010000100 | Cost Of Investments | 0 | 447.94 |
4001000401 | Amortization Of Premium | 447.94 | 0 |
| Info |
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The daily amortization delta for the sink payment date includes accelerated amortization caused by the sink payment, plus the scheduled amortization for that day. When processing a sink transaction, if you elected to take accelerated amortization, and you do not have amortization applied for that position, Eagle Accounting treats the gain/loss from a sink transaction as Gain/Loss. |
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If the value of the Sinking Fund Payment Redemption Gain/Loss Flag field is set to Capitalized Sinking Fund Payment, Eagle Accounting calculates gain/loss based on the unit cost of the security. The difference between the cost and the proceeds is classified as a security Gain. The amortization yield takes into account the sinking fund schedule and the impact from the sinking fund payments at unit cost.
General Ledger Entries
Account Number | Account Name | Debit Amount | Credit Amount |
|---|---|---|---|
1002000100 | Investment Receivable | 45,049.25 | 0.00 |
1010000100 | Cost Of Investments | 0.00 | 45,049.25 |
| Info |
|---|
Eagle Accounting recognizes a sink corporate action by the PMT Event Type. |
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