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 |
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