Accounts Associated with Funding Options Accounts

Funding Options accounts have accounts recording interest income or expense. For example, Marketable Securities (v2010) and Interest on Marketable Securities (v2010.05) behave in consolidations according to their forecast method and their associated accounts. Consolidated interest income/expense for given Funding Options accounts is generally not the sum of the business units.

Consolidated Interest Income Example

If a business unit generates a cash surplus of $100 invested in Marketable Securities and those securities earn 7%, the business unit has an interest income of $7. Consolidate this business unit with one generates a large cash deficit. After consolidation, if Marketable Securities has a surplus/deficit setting in the consolidated parent, the consolidated business unit shows marketable securities of 0. As long as the forecast method for interest income is a percent of Marketable Securities, interest income is zero. The interest rate is 7% in the consolidated parent.

If Marketable Securities does not have a surplus/deficit setting, the consolidated parent has $100 of Marketable Securities and $7 of interest income.

If interest income is forecast as an actual value in the consolidated parent but marketable securities has a surplus/deficit setting, Marketable Securities is zero, but interest income is $7.

Consolidated Interest Rate Example

To get consolidated interest rates, Consolidator temporarily assumes that Marketable Securities does not have a surplus/deficit setting, and adds up all child entity output values for both marketable securities and interest income, and solves for the rate. This rate becomes the input for interest income. If marketable securities has a surplus/deficit setting, this rate applies to whatever output Marketable Securities uses for consolidated interest income.

Item

File

Business unit 1

Business unit 2

Mkt. sec.

 

300

400

Interest rate

6.57%

6%

7%

Interest inc.

 

18

28

Marketable Securities and Interest Income values depend on other data, but rates can be determined by adding 18 and 28 and dividing the sum by the sum of 300 and 400.