Set Up Reference Data for Sinking Fund Securities
- Nancy Cohn (Deactivated)
Eagle Accounting recognizes a security as a sinking fund bond when you set the security's Sinkable (tag 1780) option to Yes. Also, when the security master record has the Sinkable field set to Yes, the system expects you to populate a sinking fund schedule, both in the Schedule table and in the Corporate Action table.
Alternatively, if you expect sinking fund payments to change, and plan to use custom sinking fund schedules, you also set the security's Sinkable (tag 1780) option to Yes. The system allows you to define a custom sinking fund schedule in the Schedule table and in the Corporate Action table.
Set Up Securities
When you establish the SMF, the following options apply to sinking fund securities. For general information on using Reference Data Center to set up securities, see Create and Delete Securities. Otherwise, if you use Issue Viewer to set up securities, see Set Up Securities in Issue Viewer.
You can use the following options when you set up sinking fund securities for use with Eagle Accounting.Â
Option | Tag | Description |
|---|---|---|
Sinkable (formerly Sink Flag) | 1780 | Determines whether the security is eligible for sinking fund payments. Options include:
|
Pro Rata Sink | 11304 | Indicates whether the security is a Pro Rata sinking fund. The system uses this option in conjunction with the Sinking Fund Payment Redemptions Gain/Loss Flag field in the accounting basis to determine if the entity/accounting basis and security combination should use the Capitalization method or record cost reduction for sinking fund payments as Gain/Loss or as Accelerated Amortization. Options include Yes and No. For more information, see Set Up Entities for Sinking Funds. |
Set Up a Sinking Fund Schedule
When you populate the Schedule table, the sinking fund schedule is based on the percentage sunk. For example, if the Original Issue Amount was $1,000,000, and the Sinking Fund Percentage is .1%, the amount posted is $1,000. The entire Sinking Fund schedule must have Schedule Amount values that add up to 1.00 (100%).Â
When you add a schedule, set the Schedule Type list to SINK. For each entry in the sink schedule, you provide an Effective Date, Price/Rate, and Schedule Amount value. For information about adding schedules in Reference Data Center, see Manage Schedules.
The following figure shows an example of a sinking fund schedule displayed for a security in the Schedule tab of the Securities workspace.
About the Sinking Fund Schedule in the Corporate Action Table
Eagle Accounting automatically creates a corresponding sink schedule in the Corporate Action table when you enter a sink schedule in the Schedule table.
When the system populates the Corporate Action table with the Sinking Fund payment schedule, it bases the schedule on the percentage sunk. For example, if the Original Issue Amount is $1,000,000 and the Sinking Fund Percentage is .1%, the amount posted is $1,000. The entire sinking fund schedule must add up to 1 (100%). Eagle Accounting processes the sinking fund payment with a Transaction Type of Sink.
For more information about setting up and processing corporate actions for sinking fund schedules, see Manage Sinking Fund Payments.Â
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