Adjust Income for an Equity Method Position

Owned by Nancy Cohn (Deactivated)
Last updated: Jul 18, 2023
4 min read

In the Adjust Equity Method Income panel, you can manually process an income adjustment for a position that uses the equity method of accounting. You can record an income adjustment for undistributed or unrealized investment income, based on regulatory requirements, and can also record unrealized market and currency gains/losses. If you believe that book value does not equal market value, you can override the market value. You can use this ability to override market value for statutory reporting or for use in the Portfolio Valuation report. 

The Adjust Equity Method Income panel differs from the panels that you use to process income adjustments in core STAR accounting The Adjust Equity Method Income panel processes each accounting basis individually. You can use this panel with equity method positions to adjust only an accounting basis that uses the EMA accounting method. 

Access the Adjust Equity Method Income Panel

To manually adjust income for a position that uses the equity method of accounting:

  1. In Accounting Center, in the left navigation pane, click Transactions > Equity Method > Adjust Equity Method Income.
    You see the Adjust Equity Method Income panel.

  2. Under Entity Information, select the entity and accounting basis that you are adjusting. 
    You must select an entity with at least one accounting basis with an EMA Treatment of Other or STAT assigned.

  3. Under Security Information, select the security.
    You must select a position with the EMA Cost Flag field set to EMA. 

  4. Under Accounting Information, enter the effective date and accounting date for the adjustment.

  5. Complete the remaining options on the panel.
    There are separate areas of the panel where you can enter adjustment amounts for unrealized market gain/loss, unrealized currency gain/loss, and undistributed income/loss, and where you can override the position-level market value. 

  6. Click Submit.
    The system submits an EMAADJUST event. It processes the income adjustment on a pro-rata basis to all open lots.

Adjust Unrealized Market Gain/Loss

To adjust unrealized market gain/loss for an equity method position:

  1. From the Adjust Equity Method Income panel, enter the entity, security, and accounting information for the equity method position. 

  2. Under Unrealized Market Gain/Loss, click the Unrealized Market Type box and select Unrealized Gain or Unrealized Loss. 
    You can view the current balances for the position.

  3. Specify the adjustment amount in the Unrealized Market Loss Local box or the Unrealized Market Gain Local box. 

  4. Complete the remaining options in the panel as needed.

  5. Click Submit.

Adjust Unrealized Currency Gain/Loss

You can adjust unrealized current gain/loss for a position that has an EMA Treatment of STAT, and an EMA Cost Flag of EMA,

To adjust unrealized currency gain/loss for an equity method position: 

  1. From the Adjust Equity Method Income panel, enter the entity, security, and accounting information for the equity method position. 

  2. Under Unrealized Currency Gain/Loss, click the Unrealized FX Capital Type box and select Unrealized Gain or Unrealized Loss. 
    You can view the current balance for the position.

  3. Specify the adjustment amount in the Unrealized FX Loss Base box or the Unrealized FX Loss Base box. 

  4. If the base and issue currency differ, you can edit the Local to Base FX Rate box value to change the corresponding base value. 

  5. Complete the remaining options in the panel as needed.

  6. Click Submit.

Adjust Undistributed Income/Loss

For positions with an EMA Treatment of STAT, you can adjust unrealized undistributed income/loss. For positions with an EMA Treatment of Other, you can adjust undistributed investment income/loss.

To adjust undistributed income/loss for an equity method position: 

  1. From the Adjust Equity Method Income panel, enter the entity, security, and accounting information for the equity method position. 

  2. Under Undistributed Income/Loss, click the Investment Income/Loss Type box and select Income or Loss. 
    The fields that apply to the income/loss type and the position's EMA treatment become available. You can view the current balances for the position.

  3. For a position with an EMA Treatment of STAT, do one of the following:
    - Specify the adjustment amount in the Unrealized Undistributed Income Local box or the Unrealized Undistributed Loss Local box.
    - If the base and issue currency differ, you can edit the Blended Income FX Rate box value to change the corresponding base value. 

  4. For a position with an EMA Treatment of Other, do one of the following:
    - Specify the adjustment amount in the Undistributed Investment Income Local box or the Undistributed Investment Loss Local box. 
    - If the base and issue currency differ, you can edit the Blended Income FX Rate box value to change the corresponding base value. 

  5. Complete the remaining options in the panel as needed.

  6. Click Submit.

Adjust the Position-Level 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. The system uses the position-level market value you provide and backs it into the unrealized gain/loss amount. 

To adjust the position-level market value for an equity method position:

  1. From the Adjust Equity Method Income panel, enter the entity, security, and accounting information for the equity method position. 

  2. Under Manual Market Value, specify the Market Value Local box value to use for the adjustment transaction.
    You can view the current market value for the position.

  3. Specify the Market Value Base box value to use for the adjustment transaction.

  4. Complete the remaining options in the panel as needed.

  5. Click Submit.

Â