Convert Positions for ECL for US GAAP

Owned by Nancy Cohn (Deactivated)
Last updated: May 19, 2023
2 min read

 

In the Conversion of Position to Eagle STAR panel, you can add expected credit losses (ECL) to the conversion event for debt security positions. This allows you to establish the appropriate expected credit loss balance for new Eagle client conversions with appropriate accounting entries. To add expected credit losses to the conversion event when you use US GAAP, the position must be Long and the accounting basis for the positions must have an ECL Method of US Treatment with regulatory categories of AFS/HTM.

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To convert a position for expected credit losses when you use US GAAP:

  1. In Accounting Center, in the left navigation pane, click Transactions > Trades > Book Trade/Rebook Trade > Book Trade. 
    You see the Book Trade workspace.

  2. In the Search Details pane, select your search criteria.

  3. In the results grid, click a security.

  4. Do one of the following to select the transaction activity:
    - On the Book Trade tab, in the Actions group, click Action Rules, point to the transaction type of Other, and then click Conversion.
    - Right-click the security row, point to Other, and then click Conversion.
    You see the Conversion of Position to Eagle STAR panel.

  5. Enter the entity, issue, and trade information for the position.

  6. Enter the Conversion Information Local options that apply to conversion transactions that reflect asset-level Expected Credit Losses for fixed income positions that are Long. For a position with US Treatment (GAAP basis), you can:
    - Specify the Purchased Impaired value.
    - Specify the Expected Credit Loss Local values.
    - If the Regulatory Category is AFS, you can additionally specify a Regulatory Intent value.

  7. If the security has a foreign denomination, in the Conversion Information Base section, you can specify the Expected Credit Loss Base value.

  8. Complete the remaining information in the transaction entry panel.

  9. On the Form tab, in the Validation group, click Validate and validate the transaction data.

  10. Click Submit to submit the transaction for processing.

For conversion transactions on US GAAP accounting bases, Eagle accounting rules and posting matrix post ECL ledger entries as follows: Debit Cost of Investments and a Credit to Conversion Cost. Credit contra-asset account for Allowance for ECL and debit Accumulated Undistributed Income.

Panel Example for US GAAP - AFS

A sample panel follows for the ECL method of US Treatment, for GAAP accounting basis with an AFS (Available for Sale) regulatory category. 

Conversion of Position to Eagle STAR - US GAAP AFS

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