Currency Swap Posting: Premium/Discount

Currency Swap Posting: Premium/Discount

Use

The proportionate balance on the FI account is translated into euros by means of a currency swap posting. In contrast to the currency swap posting for the loan position, the system does not generate any adjustment flows (in this case, no adjustment flows are required)

The system determines the remaining premium/discount on the basis of the cash flow in the original currency and posts this amount from the accrual/deferral account to a currency swap account (outflow). At the same time, it calculates the remaining premium/discount on the basis of the euro cash flow and posts this amount from the currency swap account back to the accrual/deferral account (inflow).

The local currency amounts for inflow and outflow flow types are the same. The system only makes currency swap postings for flow types with Flow category TA and Calculation category TA automatically when you run the contract currency conversion. These flows must also be flagged as relevant for accrual/deferral. Flow types with the accrual/deferral method 0: None or manual are not included.

Example

A loan with posted discount or premium flows is converted from a participating currency to the euro.

In Financial Accounting (FI), the proportionate remaining discount or premium for this loan remains on the accrual/deferral account in the original currency (transaction currency). For the loans subledger, the system calculates the remaining discount or premium in euros.

If an accrual/deferral run is performed after the conversion, the system posts the accrual/deferral amounts in euros, hence reducing the balance for the transaction currency in euros rather than in the original currency.

After all the loans have been changed over to the euro, there is still a balance in the original currency on the accrual/deferral account. At the end of the dual currency phase, this balance must be cleared by means of a manual transfer posting in FI.

The system performs the accrual/deferral of the discount or premium correctly, even if you do not make the currency swap postings.