Open Cap/Floor Transaction Example
- Nancy Cohn (Deactivated)
Open Transaction Information:
Buy to Open
Trade Date 01/04/02
Entity is GBP based
Security is USD based
Security Trades Flat
Option | Value |
|---|---|
Broker | Eagle Investment Systems |
Trade Date | 01/04/02 |
Settlement Date | 01/04//02 |
Price Multiplier | .01 |
Quantity Scale | 1.00 |
Quantity | 1,000,000 |
Price | 0.09575000 |
Spot Exchange Rate | 1.455700000000 (GBP to USD) 01/04/02 |
Local Premium Value = (1,000,000 * 1.00) * (0.09575000 * .01) = 957.5 USD
Base Premium Value = 957.50 / 1.44557 = 657.76 GBP
General Ledger Entries executed by Eagle Accounting on 01/04/02 follow.
Debit/Credit | G/L Account Name | Amount & Currency |
|---|---|---|
Debit | Cost of Investments (Local) | 957.50 USD |
Credit | Payable for Investments Purchased (Local) | 957.50 USD |
Debit | Cost of Investments (Base) | 657.76 GBP |
Credit | Payable for Investments Purchased (Base) | 657.76 GBP |
When earnings processing is invoked, Eagle Accounting posts to the following accounts.
Debit/Credit | G/L Account Name | G/L Account Number |
|---|---|---|
Debit | Cap/Floor Amortization Expense | 1002000100 |
Credit | Cost of Investments | 1010000100 |
Debit | Receivable For Cap/Floor Interest | 1007000590 |
Credit | Cap/Floor Interest Income | 4001000190 |
Local Currency = Settle Currency ≠Base Currency:
Debit/Credit | G/L Account Name | G/L Account Number |
|---|---|---|
Debit | Cap/Floor Amortization Expense (Local) | 1002000100 |
Credit | Cost of Investments (Local) | 1010000100 |
Debit | Receivable For Cap/Floor Interest (Local) | 1007000590 |
Credit | Cap/Floor Interest Income (Local) | 4001000190 |
Debit | Cap/Floor Amortization Expense (Base) | 1002000100 |
Credit | Cost of Investments (Base) | 1010000100 |
Debit | Receivable For Cap/Floor Interest (Base) | 1007000590 |
Credit | Cap/Floor Interest Income (Base) | 4001000190 |
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