Joint Accrual/Deferral of Flows (Difference Procedure)

Use

As part of the difference procedure , you can jointly accrue/defer flows with different update types for a position or financial transaction. You can do this by making the same entry in the Grouping field for update types that are to be accrued/deferred together. You make this entry in Customizing under Assign Update Types for Accrual/Deferral.

Prerequisites

Update types that are to be accrued/deferred jointly need to have the same type of revenue and the same currency. Flows with different currencies are always accrued/deferred separately.

Examples

Example 1 : Nominal interest and capitalized interest are accrued/deferred together.

Interest Accrual/Deferral During Rollover with Interest Capitalization

Date

Update Type

Amounts

01/01/2005

MM1105-

Asset

100

01/15/2005

AD1004

Accrual/deferral

5

01/31/2005

MM1120+

Final repayment

100

MM1200+

Nominal interest

10

At the time of rollover, flow MM1200+ (nominal interest) is replaced by MM1106- (capitalized interest). The interest payment and final repayment are intended to be made on 02/28/2005.

01/01/2005

MM1105-

Asset

100

01/15/2005

AD1004

Accrual/deferral

5

01/31/2005

MM1106+

Capitalized interest

10

AD1004

Accrual/deferral

5

02/15/2005

AD1004

Accrual/deferral

5.5

02/28/2005

MM1120+

Final repayment

110

MM1200+

Nominal interest

11

  • The interest accrual/deferral on 01/31/2005 is calculated as follows:

    • Total revenue: 10 (MM1106-) + 0 (MM1200+, not relevant )

    • Total accruals/deferrals to date: 5

    • This results in the accrual/deferral amount 10 – 5 = 5:

  • The interest accrual/deferral on 02/15/05 is calculated as follows:

    • Total revenue: 10 (MM1106-) + 5.5 (MM1200+, not relevant )

    • Total accruals/deferrals to date: 10

    • This results in the accrual/deferral amount 10 – 5.5 = -10:

Example 2 : Nominal interest and capitalized interest are jointly accrued/deferred whilst another profit-related flow is accrued/deferred separately.

Date

Update Type

Amounts

Calculation to date

01/01/2005

MM1105-

Asset

100

MM1301-

Charges

1.2

12/31/05

01/15/2005

AD1004

Accrual (revenue)

5

AD1015

Deferral (expense)

0.05

01/31/2005

MM1120+

Final repayment

100

MM1200+

Nominal interest

10

At the time of rollover, flow MM1200+ (nominal interest) is replaced by MM1106- (capitalized interest). The interest payment and final repayment are intended to be made on 02/28/2005.

01/01/2005

MM1105-

Asset

100

MM1301-

Charges

1.2

12/31/05

01/15/2005

AD1004

Accrual (revenue)

5

AD1015

Deferral (expense)

0.05

01/31/2005

MM1106+

Capitalized interest

10

AD1004

Accrual (revenue)

5

AD1015

Deferral (expense)

0.05

02/28/2005

MM1120+

Final repayment

100

MM1200+

Nominal interest

11