Applying Amortization Rules Methodology

When the earnings process runs, Eagle Accounting applies the amortization rules in the following order:

1. Primary Asset ID. Eagle Accounting starts at the most narrowly defined match possible, at the Primary Asset ID level. If it finds an applicable Primary Asset ID amortization rule, Eagle Accounting applies that amortization rule in the amortization yield and amortization/accretion calculation. Please note you can set up an amortization rule at a primary asset id level and at either at a market discount or market premium level or for both market discount and marker premium.

2. Amortization Accretion Rule Type. If no Primary Asset ID level amortization rule exists, Eagle Accounting tries to find an applicable amortization rule match at the Amortization Accretion Rule Type level, as specified on the security record. The security master record must meet both the rule's Amortization Accretion Rule Type and its Taxable Status Indicator criteria. Please note you can set up an amortization rule at an amortization accretion rule type level based upon the taxability status of the instrument and/or based upon if the tax lot is market premium or market discount. For example, if there is amortization accretion rule type that is called corporate bonds, the user can establish an amortization rule for corporate bonds that are taxable and purchased at market premium, as well as establish a separate amortization rule for corporate bonds that are non-taxable and both taxable and non-taxable corporate bonds that are purchased at a market discounts.

3. Processing Security Type. If no Amortization Accretion Rule Type level amortization rule exists, Eagle Accounting tries to find an applicable amortization rule match at the Processing Security Type level. If it finds an applicable amortization rule at the Processing Security Type level, it applies that amortization rule in the amortization yield and amortization/accretion calculation. The security master record must meet both the rule's Processing Security Type and its Taxable Status Indicator criteria. Please note you can set up an amortization rule at a processing security type level based upon the taxability status of the instrument and/or based upon if the tax lot is market premium or market discount. For example, for processing security type DBIBMU, the user can establish an amortization rule that are taxable and purchased at market premium, as well as establish a separate amortization rule for DBIBMU that are non-taxable and both taxable and non-taxable that are purchased at a market discounts.

4. Account Basis. If Eagle Accounting does not find an applicable amortization rule at the Primary Asset ID level, the Accretion Amortization Rule Type level, or at the Processing Security Type level, it applies the amortization rule that is the Accounting Basis Default. It applies the amortization rule for both the accounting basis and the rule's Taxable Status Indicator criteria. Please note you can set up an amortization rule at a an accounting basis level and based upon the taxability status of the instrument and/or based upon if the tax lot is market premium or market discount. For example, the user can establish an amortization rule for an accounting basis that are taxable and purchased at market premium, as well as establish a separate amortization rule for an accounting basis that are non-taxable and both taxable and non-taxable that are purchased at a market discounts.

5. If Eagle Accounting cannot find any applicable amortization rule, then the earnings transaction fails, and Eagle Accounting displays an amortization rule load failure. The failure appears on either the trade panel, when you enter a trade and instructs Eagle Accounting to calculate yield and accrued interest, or, the failure appears in the Exceptions workspace when you run the earnings process.