Entering content frameThis graphic is explained in the accompanying text Example: Discount With Securities Purchase (Gross Procedure)

This example will explain the gross procedure for managing premiums/discounts. You can see all the flows that arise from the purchase of a security with 50% discount, including a key date valuation (amortization), right up to the sale of the security.

Note

The update types used in the example correspond to the Customizing settings delivered with the system.

Prerequisites

In Customizing under Assign Position Management Procedure, you have to assign a Structure link position management procedure to the position. This position must specify the gross procedure for the management of premiums/discounts, and amortization for performing the key date valuations.

Process Flow

  1. First the security purchase is concluded in transaction management with a discount of 50%. The system generates the following flows:

    2. Update type Purchase SE1000

    Posting record:

    Position to bank 1,000 EUR (1)

  2. A derived business transaction is generated for posting the discount.

    3. Update type Post discount DBT_A005

    Posting record

    Position to deferred income 1,000 EUR (2)

  3. At year end the position is amortized by way of the valuation. This means a write-up of 100 EUR.

    4. Update type Amortization (Write-up) V302

    Posting record

    Deferred income to interest revenue 100 EUR (3)

  4. Sale of the position using transaction management to the amount of 1,500 EUR.
    1. Update type Sale SE2000

      2. Posting record:

      Balance sheet clearing to position 1,500 EUR (4a)

    2. A derived business transaction is generated for the amortization up to the sale date.

      3. Update type Amortization DBT_C006

      Posting record:

      Deferred income to interest revenue 100 EUR (4b)

    3. A derived business transaction is generated to clear the discount.

      4. Update type Translation discount DBT_E019

      Posting record:

      Deferred income to P&L 800 EUR (4c)

    4. A derived business transaction is generated to post the realized rate loss.

      5. Update type Rate loss DBT_B003

      Posting record:

      Realized rate losses to position 500 EUR (4d)

    5. A translation (not relevant to posting) is generated through the clearing of the purchase value from the position component:

Update type DBT_E001 Translation purchase value 1,000 EUR

This graphic is explained in the accompanying text

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