5.4 FASB Fees Amortization Using Straight Line Method
Oracle Lending facilitates transfer of unamortized fees to the child contract. You have to select the accrual method as Straight Line to accrue the fee using straight line method. To accrue the fee using straight line method, you have to select the accrual method as Straight Line in the Loans and Commitments Fee screen.
Click Fee in the Product Definition screen to invoke this screen.
You have to maintain the fee rule at the product level for computing the fee. To transfer the unamortized straight line fee to the child contract, you have to select both Apply for Re-price and Accrual Required option.
For the fee component you associate with product you can specify if the component is considered for straight line accrual. Straight line accrual selected here for the product gets defaulted to the contract level.
Select Accrual Required check box for applying straight line accrual. The accrual method should be selected as Straight Line for the fee to be accrued using straight line method.
You are allowed to attach multiple fee components to the product. For the fee component which you associate with product, you have to specify if the component is considered for straight line accrual. The straight line accrual is selected for the product to get defaulted to the contract level.
During transfer, the system checks if the unamortized fee component has selected for both Apply for Re-price and Accrual Required before transferring the amount from parent contract to child. An error message throws up otherwise and the system does not save the transaction.
For arrear or advance type of fee, the Daily Straight Line accrual is calculated based on the number of days between the start date and end date.
Example
- Arrear/Advance Fee Calculated – 1000
- Start Date – 01-Apr-2005
- End Date – 01-May-2005
- No of Days – 30