Understand Yield Recalculation after an Amortization Rule Change

In some cases a change to an amortization rule results in the system recalculating the yield during processing. In other cases the system does not need to recalculate the yield after an amortization change, and no recalculation occurs. This section describes the conditions under which Eagle Accounting does and does not recalculate the yield during processing after an amortization rule change. 

An amortization rule change, for purposes of this discussion, refers to a scenario where an existing amortization rule requires a change as of a certain point in time. The old rule ends, and the new rule begins to take its place. For example, the amortization rule currently processes using the Constant Yield 1 amortization method, and as of a certain date, you plan to change the amortization method to Level Yield 2. In this case, you edit the existing amortization rule with the old amortization method and enter the Rule End Date. Then you create a new amortization rule with the new amortization method and with a Rule Begin Date that indicates when the new rule begins. For example, the End Date of a previous amortization rule is December 31st, and the Begin Date of the new amortization rule is January 1st.

During Earnings processing, the system checks the amortization rule Instance (tag 4256) to determine whether the amortization rule changed. If the amortization rule did change, the system identifies which values changed between the old amortization rule and the new amortization rule. It uses this information, along with additional criteria, to determine whether it is necessary for the system to recalculate the yield. The system only recalculates the yield when the change to the amortization rule meets the criteria that indicates that the change has an impact on the yield result and the yield recalculation is necessary.

When the System Does Not Recalculate the Yield after an Amortization Rule Change

If you make a change to an amortization rule, and you do not change any of the amortization rule values that can have an impact on the yield results, the system does not recalculate the amortization yield. For a list of the amortization/accretion rule values that can have an impact on the yield results, see the following section. 

If you make a change to an amortization rule, and you do change any of the amortization rule values that can have an impact on the yield results, but the holding does not meet the additional criteria needed to require a yield recalculation, the system does not recalculate the amortization yield. For a list of the amortization and accretion rule values that can have an impact on the yield results, along with the additional criteria needed for yield recalculation, see the following section. 

When the System Recalculates the Yield after an Amortization Rule Change

If you make a change to the amortization rule, and you change specific amortization rule values and meet additional criteria that can have an impact on the yield results, the system does recalculate the amortization yield. 

The following table lists the conditions associated with an amortization/accretion rule change where it is necessary for Eagle Accounting to recalculate the yield during processing, The system checks 1) whether the amortization rule instance changed, and if so, 2) whether you changed a specific field value for the amortization and accretion rule, and additionally 3) whether the holding meets some additional criteria. 

For example, in the following table, the first row indicates that the system needs to recalculate the yield in cases when you change the Amortization Accretion Method (tag 113) field value, but only in some cases. It recalculates the yield if you change the Amortization Accretion Method value and if the value changed from the previous day. It does not recalculate the yield if you change the Amortization Accretion Method value but the value did not change from the previous day. For a description of each field, see Amortization & Accretion Rules Panel Options.