Manage Equity Method Transactions

When you use the equity method of accounting, you use the following specialized transactions rather than the transactions you typically use for trades and other transactions. However, Eagle Accounting does not allow you to process the regular non-EMA transactions, such BUY and SELL, on EMA positions. In that case, the system rejects the main transaction and all replicated transactions.

For example, an entity has two accounting bases, GAAP (primary) and STAT (secondary), and the position in the STAT basis uses the equity method of accounting. In this case you use an Equity Method type transaction for the Buy Shares Equity Method panel to submit an EMAOPEN trade, which replicates across the accounting bases. The system processes the transaction in the same way as it processes the BUY in GAAP, and it provides extra EMA logic in the STAT basis. Because the position has at least one accounting basis that uses the equity method of accounting, the system does not allow you to use the Book Trade tool's Open Equity/Mutual Fund panel to enter the BUY for that position.

You can manage transactions associated with the equity method of accounting when you:

• Assign the EMA/STAR accounting method to an existing position 

• Convert positions to Eagle Accounting that use the equity method of accounting.

• Book open trades to buy shares for securities that use the equity method of accounting.

• Book close trades to sell securities that use the equity method of accounting.

• Process cost adjustments for impairments, new partners added, and additional investments.

• Adjust income for unrealized market gain/loss, undistributed income/loss, and manual market value

• Process distributions to record Return of Income or Return of Capital activity.

• Cancel equity method trades.

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