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By using the methodology of accruing daily income with the next day's ILB index ratio, the security in this scenario would accrue the inflation income shown in the following table.

The alternative method of this is to use the Trade ILB Index Ratio, which would cause zero inflation linked income that is recognized on day 1. This would result in an ILB income accrual delta and true up on settlement date of the close transaction. This methodology fails for two reasons. First, it reflects zero inflation linked income on settlement date of the open transaction. Secondly, it requires income accruals on settlement date of a close transaction. This does not to adhere to industry standards of accruing income through settlement date minus one.

The security in the scenario that follows would reflect the inflation income shown in the following table.

The alternative method is to true-up accruals on settlement date minus one using the settlement date ILB Index Ratio. This method fails in two ways. First, it would again cause zero inflationary income to be recognized on settlement date. Secondly, it creates a "blip" of inflation income on settlement date minus one.

With regards to amortization yields and amortization, Eagle Accounting calculates a prospective amortization yield based on the current principal cost and an applicable amortization rule. Barring any changes to prepayment assumptions, reference data that affects yield (changes in inflation do not affect yield), or which amortization rule is used, the amortization yield that is calculated on settlement date of the trade remains constant over the life of the ILB bond. Eagle Accounting applies amortization based on the applicable amortization rule established in the entity/accounting basis setup. Note that Eagle Accounting calculates an adjusted issue price, as of settlement date of the transaction, for entity/ accounting bases that recognize OID.

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