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Eagle Accounting recognizes a security as a sinking fund bond when you set the security's Sinkable or Sink Flag (tag 1780) option to Yes.
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When the security master record has the
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Sinkable field set to Yes, the system expects you to populate a sinking fund schedule, both in the Schedule table and in the Corporate Action table.
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However, if you expect actual sinking fund payments to change from expected payments, and plan to use custom sinking fund schedules rather than sinking fund schedules, you must also set the security's
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Sinkable (tag 1780) option to Yes. The system then allows you to define a custom sinking fund schedule in the Schedule table and the system, in turn, defines a corresponding sinking fund schedule in the Corporate Action table.
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Set Up Securities
When you establish the SMF, the following options apply to sinking fund securities that use sinking fund schedules or custom sinking fund schedules. For general information on using Reference Data Center to set up securities, see Create and Delete Securities. Otherwise, if you use Issue Viewer to set up securities, see Set Up Securities in Issue Viewer.
You can use the following options when you set up sinking fund securities for use with Eagle Accounting.
Option | Tag | Description |
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Sinkable (formerly Sink Flag) | 1780 | Determines whether the security is eligible for sinking fund payments. Options include:
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Pro Rata Sink | 11304 | Indicates whether the security is a Pro Rata sinking fund. The system uses this option in conjunction with the Sinking Fund Payment Redemptions Gain/Loss Flag field in the accounting basis to determine if the entity/accounting basis and security combination should use the Capitalization method or record cost reduction for sinking fund payments as Gain/Loss or as Accelerated Amortization. Options include Yes and No. For more information, see Set Up Entities for Sinking Funds |
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WRITERS NOTE: should we suggest identifying the security as a Private Placement (tag 1421).
Add a Custom Sinking Fund Schedule
WRITESR NOTE: new section
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When you add a schedule, set the Schedule Type list to CSTMSINK. For each entry in the sink schedule, you provide an Effective Date, Price/Rate, and Schedule Amount value. You can set the Bypass Sink Check field to Yes to indicate that the Schedule Amount Values do not need to add up to 1.00. Otherwise, if you leave this value null, the panel does not save the schedule unless the schedule amounts total 1.00, or 100%.
Change a Custom Sinking Fund Schedule
If you change a custom sink schedule because a schedule amount changes, you can click the Override Value button to allow you to change a payment amount or other value. Again, you can set the Bypass Sink Check field to Yes to indicate that the Schedule Amount Values do not need to add up to 1.00. Otherwise, if you leave this value null, the panel does not save the schedule unless the schedule amounts total 1.00, or 100%. For information about adding and changing schedules in Reference Data Center, see Manage Schedules.
WRITERS NOTE: cannot find in new UI to view Reason code
About the Sinking Fund Schedule in the Corporate Action Table
WRITERS NOTE: update how announcement is created. auto or manual?
Eagle Accounting automatically creates a corresponding sink schedule in the Corporate Action table when you enter a sink schedule in the Schedule table.
When the system populates the Corporate Action table with the Sinking Fund payment schedule, it bases the schedule on the percentage sunk. For example, if the Original Issue Amount is $1,000,000 and the Sinking Fund Percentage is .1%, the amount posted is $1,000. The entire sinking fund schedule must add up to 1 (100%). Eagle Accounting processes the sinking fund payment with a Transaction Type of Sink.
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