Set Up Entities for the Equity Method of Accounting

Owned by Nancy Cohn (Deactivated)
Last updated: Jul 17, 2023
3 min read

When you use the equity method of accounting, you can set up entity/accounting basis and URGL rule information. 

Set Up Entities and Accounting Bases

When you use the equity method of accounting for an entity, you must set the URGL Accounting Rule (tag 1079) and the Equity Method Treatment field (tag 16084) for the accounting basis that uses the Equity Method. If your entity has multiple accounting bases, you can establish the primary or a secondary basis for use with the equity method. 

To set up entities, master funds, and accounting bases for use with the equity method of accounting:

  1. From any Eagle window, click the Eagle Navigator button to access the Eagle Navigator.

  2. Enter the panel name to add or change a basic accounting entity, master fund, or accounting basis in the Start Search text box.
    You can specify accounting basis level options for the equity method of accounting using the Create/Edit Entity panel, Create Master Fund panel, Edit Master Fund/Sector panel, Add Basis to a Portfolio panel, and Edit a Basis on a Portfolio panel. These panels are available in Portfolio Data Center and in Accounting Center. 

  3. Click the link to access the panel.

  4. Specify the primary or secondary accounting basis for the entity, as appropriate. 
    You can use the entity's primary basis or a secondary basis as the basis that follows the equity method of accounting. You can use a GAAP, IFRS, STAT, or any basis for use with the equity method. 

  5. In the URGL Accounting Rule field, ensure you are using the appropriate rule for the basis that uses the equity method of accounting. 

  6. In the Lot Selection Method field, specify the lot selection method the system uses to relieve (sell) lots of a security held by the entity. 
    If an entity/accounting basis uses the equity method of accounting, be aware that the system applies a lot selection method of Pro-Rata to Close transactions for all securities using the Equity Method (EMA) accounting method, regardless of the basis accounting method or basis lot selection rule.

  7. In the Equity Method Treatment field, if the selected accounting basis uses the equity method of accounting, identify the treatment of assets held under the equity method of accounting. You cannot change this value when you edit an entity/basis. Options include:
    - STAT Treatment. Indicates that you are using the equity method of accounting with a STAT accounting basis for use with statutory insurance. If you are creating or editing a STAT basis that uses the equity method, you must choose STAT Treatment. You can apply the STAT Treatment to any basis other than a GAAP basis.
    - Other Treatment. Indicates that you are using the equity method of accounting with a non-STAT accounting basis, such as a GAAP basis that uses Generally Accepted Accounting Principles (GAAP). You can apply the Other Treatment to any basis other than a STAT basis.

  8. Complete the remaining fields on the panel for the entity.

  9. Save your changes.

Set Up URGL Rules for the Equity Method of Accounting

The system uses accounting basis-level URGL rules (tag 1079 on entity/basis panels) to control whether to process URGL (unrealized gain/loss) G/L entries for positions within the basis. If you hold a position as Equity Method (EMA), you should add it to the URGL rule for the basis, to process neither Capital nor FX gain/loss entries.