Report on the Equity Method of Accounting

Eagle's Investment Accounting report package can provide specialized information for investments that use the equity method of accounting.

If you use Eagle's insurance accounting solution, statutory schedules and exhibits also support equity method accounting activity. For more information, see the Insurance Accounting user documentation.

Use STAR to PACE Direct with the Equity Method of Accounting

The following table lists the events related to the equity method of accounting for each system control value and the action STAR to PACE Direct uses in handling the cash activity information.

The system can only set Performance Code Values on transaction event types to either Negative or Positive. However, for the equity method of accounting adjustment transaction (EMAADJUST event), the system must consider the event reason to determine the appropriate setting. For example, EMAADJUST events with an event reason of EMAADDINV (Additional Investment) are set to Positive while all other EMAADJUST events are set to Negative or NoFlow.

Source	Code Category	System Control	Event	Transaction Notes	Action
EAGLE PACE	STAR_PERF_FLOW	0	ECCONV		Positive
EAGLE PACE	STAR_PERF_FLOW	0	EMAADJUST	EMAADDINV	Positive
EAGLE PACE	STAR_PERF_FLOW	0	EMACLOSE		Negative
EAGLE PACE	STAR_PERF_FLOW	0	EMAADJUST	EMADIST	Negative
EAGLE PACE	STAR_PERF_FLOW	0	EMAADJUST	EMAIMPAIR	NoFlow
EAGLE PACE	STAR_PERF_FLOW	0	EMAADJUST	EMAINC	NoFlow
EAGLE PACE	STAR_PERF_FLOW	0	EMAADJUST	EMANEWPART	NoFlow
EAGLE PACE	STAR_PERF_FLOW	0	EMAOPEN		Positive
EAGLE PACE	STAR_PERF_FLOW	0	EMAADJUST	STARDIST	Negative

On this page

1 Use STAR to PACE Direct with the Equity Method of Accounting
2 About the EMA Earned Income Report
3 About Income Reporting and the Equity Method of Accounting
4 Use the Holdings Report with the Equity Method of Accounting
5 Use the Ledger Subledger Reconciliation Report with the Equity Method of Accounting
6 Use the Portfolio Valuation Report with the Equity Method of Accounting
7 Use the Realized Gain Loss Report with the Equity Method of Accounting
8 Use the Trade Activity Report with the Equity Method of Accounting

About the EMA Earned Income Report

The EMA Earned Income report displays income for positions that use the equity method of accounting (EMA). It provides income balances for Undistributed Income and Distributed Income The report shows beginning, ending, and changes in income balances.

About Income Reporting and the Equity Method of Accounting

In Eagle Accounting, Income reporting traditionally uses Income records from which to derive the report values. However, for positions that use the equity method of accounting, you manually derive Equity/Cost Method income, and the system does not store corresponding Income records in the Income object. As a result, most Income reports in the Investment Accounting standard report package do not report income for equity method positions. You can use the EMA Earned Income report to report on income for these positions.

Use the Holdings Report with the Equity Method of Accounting

When you use the Holdings report with positions that use the equity method of accounting, the Show All results include the Ownership Percentage and Commitment. It also shows the EMA/Cost Flag value to identify the accounting method used. The report does not derive the Amortized Cost field amount. Instead, the system uses the values from Amortized Cost Local (tag 4601) and Amortized Cost Base (tag 4602) on the position level, which it calculates when it processes transactions.

Use the Ledger Subledger Reconciliation Report with the Equity Method of Accounting

The Ledger Subledger Reconciliation report reflects the ledger accounts specific to the equity method of accounting. Each account is mapped to a subledger entry in the system.

Use the Portfolio Valuation Report with the Equity Method of Accounting

If you believe that the current book value does not equal market value for your investment, you can override the market value. In the Adjust Equity Method Income panel, you can manually override the market value that Eagle Accounting calculates for market value in core accounting reports for a position that uses the equity method of accounting. You can specify a Market Value Local (tag 16139) and Market Value Base (tag 16140) value in the adjustment panel. The Portfolio Valuation report displays Market Value based on these fields, and rather than calculating Market Value, the report backs into the Unrealized Gain/Loss amount. If you do not specify the Market Value on the equity method position, the report calculates it as usual. In addition, when the report calculates Unrealized Gain/Loss, it adds the value from tags 16090 and 16091 (UNREALIZED INCOME/LOSS L/B) to the generic Market/Currency fields to derive the total Gain/Loss.

Use the Realized Gain Loss Report with the Equity Method of Accounting

The Realized Gain Loss report can provide information about the currency gain/loss accounts used for distributions associated with equity method positions. Capital and income accounts associated with these currency gain/loss accounts are dependent on the transaction's EMA Treatment (STAT, Other) and the Equity/Cost Flag (EMA, STAR) values.

Use the Trade Activity Report with the Equity Method of Accounting

The EMAADJUST event can apply to income adjustments, cost adjustments, distributions, and EMA activation for equity method positions. The system uses the Reason code (tag 56) to track these purposes as EMAINC, EMACOST, EMADIST, and EMAACT. The Trade Activity report maps tag 56 into the transaction code when tag 55 is equal to EMAADJUST. The report also recognizes the Investment Type, EC, to accommodate Joint Venture/Limited Liability/Partnership securities.