Convert JVLCLP Security Scenario for EMA Method
- Nancy Cohn (Deactivated)
This scenario describes how you convert a Joint Venture (JVLCLP) security when you use the Equity Method (EMA) accounting method. When you use the equity method of accounting for a position, you can hold positions that use the Equity Method (EMA) accounting method as well as positions that use the STAR accounting method.Â
For this scenario the Entity (EMAENT) has two bases:
STAT (uses the STAT equity method treatment)
GAAP (use the Other equity method treatment)
Any other bases that use the generic STAR method of accounting process the Open, Close, and Conversion transactions as they normally do in Eagle Accounting, while all of the Adjustment transactions are not available for generic STAR accounting bases.
Entity EMAENT holds 1,000 units of security Sample Joint Venture and needs to convert it onto the system.
The position is booked with a new amount of $10,000. There are also values for unrealized gain ($300), unrealized FX loss (-$200), and Unrealized Income ($600) for STAT/Undistributed Income ($600) for Other to convert. Note that the Unrealized Market, FX and Income entries are automatically processed to the corresponding Accumulated account, because the expectation is these transactions will process across a year-end.
The system creates new positions for both STAT and GAAP, sets them to EMA, with the following ledger activity. Accounts specific to the equity method of accounting appear in yellow.
STAT Treatment
Account | Account | Debit | Credit |
|---|---|---|---|
1010000100 | COST OF INVESTMENTS | 10,000.00 | 0.00 |
9999999992 | CONVERSION COST | 0.00 | 10,000.00 |
1011000103 | UNREALIZED APPRECIATION OF UNDISTRIBUTED INCOME | 600.00 | 0.00 |
1011000101 | UNREALIZED APPRECIATION OF INVESTMENTS | 300.00 | 0.00 |
3003000335 | ACCUMULATED UNREALIZED GAIN/LOSS ALLOCATED TO CAPITAL | 0.00 | 300.00 |
1011000202 | UNREALIZED CURRENCY DEPRECIATION OF INVESTMENTS | 0.00 | 200.00 |
3003000336 | ACCUMULATED UNREALIZED CURRENCY GAIN/LOSS ALLOCATED TO CAPITAL | 200.00 | 0.00 |
3003000337 | ACCUMULATED UNREALIZED INCOME/LOSS | 0.00 | 600.00 |
Other TreatmentÂ
Account | Account | Debit | Credit |
|---|---|---|---|
1010000100 | COST OF INVESTMENTS | 10,600.00 | 0.00 |
9999999992 | CONVERSION COST | 0.00 | 10,000.00 |
1011000101 | UNREALIZED APPRECIATION OF INVESTMENTS | 300.00 | 0.00 |
3003000335 | ACCUMULATED UNREALIZED GAIN/LOSS ALLOCATED TO CAPITAL | 0.00 | 300.00 |
1011000202 | UNREALIZED CURRENCY DEPRECIATION OF INVESTMENTS | 0.00 | 200.00 |
3003000336 | ACCUMULATED UNREALIZED CURRENCY GAIN/LOSS ALLOCATED TO CAPITAL | 200.00 | 0.00 |
3003000338 | ACCUMULATED UNDISTRIBUTED INVESTMENT INCOME | 0.00 | 600.00 |
In both cases the system stores the Unrealized market, FX, and income/loss amounts on the position and lot levels, for reporting and future transaction purposes.
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