When you close a Cap/Floor contract, the system performs the following processing:
Calculates and stores any applicable Local and Base gain/loss on the contracts. Some contracts do not have a gain/loss if the contract is purchased and closed with a cost of zero (zero cost).
Calculates any applicable traded interest.
Closes an inventory position for the number of contracts. Sell (Long) close Long positions. BUYCVR close Short position in inventory.
Updates the general ledger with the cost reduction of the contract's Realized Gain/Loss and the payable or receivable for the contracts.
The Bifurcation Method (tag 5825) field for the entity determines if Eagle Accounting processes Bifurcation on a Close transaction.
The system uses the Holding Date from the open of the Floor contract and the Trade Date of the Close transaction to determine Long Term and Short Term gain/loss.
General Ledger Entries for a Sell from a Close of a Long Position
Local Currency = Settle Currency = Base Currency:
Debit/Credit | G/L Account Name | G/L Account Number |
|---|---|---|
Credit | Cost of Investment | 1010000100 |
Debit | Investment Receivable | 1002000100 |
Debit | Receivable For Cap/Floor Interest | 1007000590 |
Credit | Realized Gain on Investments | 3006000101 |
Debit | Realized Loss on Investments | 3006000102 |
Debit | Realized Currency Loss on Investments | 3006000302 |
Credit | Realized Currency Gain On Investments | 3006000331 |
Credit | Realized Gain on Investments Short Term | 3006000111 |
Debit | Realized Short on Investment Short Term | 3006000112 |
Local Currency = Settle Currency ≠ Base Currency:
Debit/Credit | G/L Account Name | G/L Account Number |
|---|---|---|
Credit | Cost of Investment (Local) | 1010000100 |
Debit | Investment Receivable (Local) | 1002000100 |
Debit | Receivable For Cap/Floor Interest (Local) | 1007000590 |
Credit | Realized Gain on Investments (Local) | 3006000101 |
Debit | Realized Loss on Investments (Local) | 3006000102 |
Credit | Realized Gain on Investments Short Term (Local) | 3006000111 |
Debit | Realized Short on Investment Short Term (Local) | 3006000112 |
Credit | Cost of Investment (Base) | 1010000100 |
Debit | Investment Receivable (Base) | 1002000100 |
Debit | Receivable For Cap/Floor Interest (Base) | 1007000590 |
Credit | Realized Gain on Investments (Base) | 3006000101 |
Debit | Realized Loss on Investments (Base) | 3006000102 |
Credit | Realized Gain on Investments Short Term (Base) | 3006000111 |
Debit | Realized Short on Investment Short Term (Base) | 3006000112 |
General Ledger Entries for a Buy Cover of Sell from a Close of a Long Position
Local Currency = Settle Currency = Base Currency:
Debit/Credit | G/L Account Name | G/L Account Number |
|---|---|---|
Credit | Payable For Cap/Floor Interest | 2004000490 |
Credit | Investment Payable | 2002000100 |
Credit | Realized Gain on Investments | 3006000101 |
Debit | Realized Loss on Investments | 3006000102 |
Credit | Realized Gain on Investments Short Term | 3006000111 |
Debit | Realized Short on Investment Short Term | 3006000112 |
Local Currency = Settle Currency ≠ Base Currency:
Debit/Credit | G/L Account Name | G/L Account Number |
|---|---|---|
Debit | Cash (Local) | 1001000100 |