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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