13.1.2 Specify Accounting Roles for Unearned Interest Component

Oracle Lending provides the following additional roles for the unearned interest component.

• COMPONENT_UIP: Map this accounting role to an Unearned Income/Liability GL.
• COMPONENT_UIR: Map this accounting role to a Loan Asset GL.

Note:

Refer to the section Mapping Accounting Roles to Account Heads in the topic Defining the attributes specific to a loan product for further details.

Specifying event-wise accounting entries

Oracle Lending generates the event UIDB (Booking of Unearned Interest amount) to post accounting entries of unearned interest amount.

Oracle Lending also generates the amount tag COMPONENT_UINT for the unearned interest component.

Accounting entries for the event Booking of Unearned Interest Amount (UIDB)

At the time of initiation or liquidation of an Annual Rest Loan, the system checks for unearned interest schedules for which schedule due date is before or same as the initiation or liquidation date. For each such schedule, it checks whether all payment schedules falling on or before the due date have been paid. If all such schedules have been paid, it calculates the interest amount based on the outstanding principal amount and the specified interest rate on the due date of the unearned interest schedule and allocate it to all interest repayment schedules before the next interest calculation due date.

Example

Let us assume that you have disbursed an Annual Rest Loan with the following details:

• Value Date: 1-Jan-2002
• Tenor: 24 months
• Maturity Date: 1-Jan-2004

The interest payment schedules (P) and interest calculation schedule details (U) for the contract are as follows:

Interest Calculation Schedule Due date	Interest Payment Schedule Due Date
1-JAN-2002	1-APR-2002 1-JUL-2002 1-OCT-2002
1-JAN-2003	1-APR-2003 1-JUL-2003 1-OCT-2003

On 1st January 2002, the system first calculates the unearned interest amount for one year (between 1-JAN-2002 and 1-JAN-2003) and allocate the amount to each payment schedule.

After calculating the unearned interest amount and allocating the amount to the payment schedules, the system passes the following accounting entries during the event UIDB:

Accounting Role	Amount Tag	Debit/Credit Indicator
COMPONENT_UIR This accounting role is mapped to a Loan Asset GL.	COMPONENT_UINT Oracle Lending provides this amount tag and it contains the unearned interest amount.	Dr
COMPONENT_UIP This accounting role is mapped to an Unearned Income GL/Discount Liability GL. You need to credit this GL with the unearned interest amount.	COMPONENT_UINT	Cr

Accounting entries for the event LIQD

Accounting Role	Amount Tag	Debit/Credit Indicator
Customer Account	COMPONENT_LIQD	Dr At the time of liquidation, you need to collect the interest amount from the customer
COMPONENT_UIR You would have mapped this accounting role to the Loan Asset GL.	COMPONENT_LIQD	Cr

Accounting Roles for the event ACCR

Accounting Role	Amount Tag	Debit/Credit Indicator
COMPONENT_UIP	COMPONENT_ACCR	Dr
COMPONENT_INC	COMPONENT_ACCR	Cr