11.5 Entries for contracts liquidated with Previous Year Adjustment option

This topic provides the details of the Entries for contracts liquidated with Previous Year Adjustment option.

Need to maintain the following accounting entry set-up when an MM contract is liquidated with previous year adjustment option.

During the liquidation of a schedule/contract, the unrealized accruals for the previous year are liquidated before the liquidation of unrealized accruals for the current year.

For liquidating the interest components the system posts the following entries during Liquidation (LIQD) for a bearing contract:

Accounting Entires

Accounting Role	Amount Tag	Dr./Cr. Indicator
ComponentREC	Component_LIQD	Credit
Customer	Component_LIQD	Debit
ComponentUNRL	Component_LIQD_PY	Debit
ComponentINC	Component_LIQD_PY	Credit
ComponentUNRL	Component_LIQD_CY	Debit
ComponentINC	Component_LIQD_CY	Credit

If the interest has been collected in advance the following entries are passed:

Accounting Entires

Accounting Role	Amount Tag	Dr./Cr. Indicator
ComponentUNRL	Component_LIQD_PY	Debit
ComponentINC	Component_LIQD_PY	Credit
ComponentUNRL	Component_LIQD_CY	Debit
ComponentINC	Component_LIQD_CY	Credit

When the Amount Tag is of type component_LIQD_PY and the Accounting Role pertains to unrealized income/expense, the head for the accounting role is replaced by the previous year adjustment GL, while passing accounting entries.

Note:

In case a contract spans over multiple years, any event (Back dated Rate revision, Principal Change etc, back dated booking of contract etc.,) which causes the accrual balances of the previous year to be recomputed, the accrual entries are posted to the current year unrealized income and expense GL only.