Payup Adjustments Only Option Example

This section provides an example that describes the Payup Adjustments Only option, which you can define at the entity level. In the Create/Edit Entity panel and the Create Master Fund panel, the following option is available.

Option	Tag	Description

Option

Tag

Description

Payup Adjustments Only

11319

Determines whether Eagle Accounting produces a new open lot for a payup or allows a payup to create an open adjustment and modify the shares of the original open lot instead of creating a new open lot. Options include:

Yes. Books payups as an adjustment to the current open lot. Used when processing book value by component.
No. Default. Books payups as a new lot.

This simplified example illustrates the difference in processing that occurs if you set the Payup Adjustments Only option to No or if you set the Payup Adjustments Only option to Yes.

This scenario assumes:

Buy 1mm original face with a factor of 1, then process the next month’s factor 1.1.

Payup Adjustments Only = No

In this scenario:

Original Face is allocated between the Buy and the new Payup lot

1,000,000 * 1.1 factor = 1,100,000 total current face

Buy current face 1,000,000 / 1,100,000 = 90909090909 ratio original face

Payup current face 100,000 / 1,100,000 = .09090909 ratio original face

Event	Original Face	Current Face
Buy	909,090.91	1,000,000
Payup	90,909.09	100,000
Total	1,000,000	1,100,000

It is important to understand the following with the Payup Adjustments Only option set to No, as is the case in the example provided. When a payup is processed, no new original face is being created on the new payup lot. You do, however, see an increase in current face. Instead, the total original face is reallocated to all of the lots, including the newly created payup lot. The sum of those, however, is still the same. As you can see in the table above, the total original face is still 1,000,000.

Payup Adjustments Only = Yes

In this scenario:

Original Face remains 1mm and Payup is booked as an adjustment

1,000,000 * 1.1 factor = 1,100,000 total current face

Event	Original Face	Current Face
Buy	1,000,000	1,100,000
Payup		100,000
Total	1,000,000	1,100,000