About Amortization Methodology

Eagle Accounting has the ability to lock in and apply an amortization methodology, and offers the following amortization methodologies: Default, Prospective, and Retrospective.

• Default. The legacy amortization methodology utilized in Eagle Accounting prior to the V17 release. The Default amortization methodology is prospective by nature with the ability to offer ad hoc retrospective amortization true ups. Prospective in nature means that when an amortization yield is calculated and applied, the amortization is calculated from the start of the current coupon period up to the current earn thru date. In the event that a retrospective amortization calculation is executed, that retrospective amortization yield is held constant for the current coupon period. The next following coupon period, Eagle Accounting will calculate a new prospective yield based upon projected cash flows and amortize cost as of the start of the coupon period. If you select this option, you must also specify the Prospective Amortization Yield Recalculation Frequency, which tells the Amortization Process when and under what conditions to recalculate amortization yields.

• Prospective. The Prospective amortization methodology is very similar to the Default amortization methodology, where amortization yields and changes in amortization are calculated and applied prospective from the start of the coupon period. The difference is that the prospective amortization methodology does not allow any retrospective amortization calculations. If you select this option, you must specify the Prospective Amortization Yield Recalculation Frequency.

• Retrospective. The retrospective amortization methodology calculates the initial amortization yield at time of purchase, locks that yield in, and does not recalculate and apply a new amortization yield until a retrospective amortization calculation is executed. It then holds that yield constant until another retrospective amortization yield is recalculated. If you select this option, you must specify an Automatically Apply Retrospective Amortization field value. You can manually invoke Eagle Accounting's retrospective amortization calculation or can schedule it to execute based upon certain conditions or frequency. For more information, see Calculate Retrospective Amortization.

You can select an amortization methodology in the Amortization & Accretion Rules panels.