1.1.3.1 Events and Accounting Entries for Discount Accrual

This topic describes the events and accounting entries for discount accrual.

While defining the accounting entries for the Loans and MM modules you must identify the events and accounting entries that are required for discount accrual accounting. One of these is the yield to maturity (YTM) based Discount Accrual (YACR) event. It is meant to indicate the periodic discount accruals for the contract.

The Accounting Roles that should be associated with the event YACR are:

Table 1-3 Accounting Roles

Accounting Role	Acquisition Type	Product Type	Description
EIMDISCRIA	Discount	Asset	Effective Interest Based Discount To Be Accrued
EIMDISCINC	Discount	Asset	Effective Interest Based Discount Accrued Till Date
EIMPREMPIA	Premium	Asset	EIM Premium paid in advance
EIMPREMEXP	Premium	Asset	EIM Premium Expense
EIMINTADJREC	Par	Asset	EIM Interest Adjustment Receivable
EIMINTADJINC	Par	Asset	EIM Interest Adjustment Income

Table 1-4 Amount Tags for the YACR Event

Amount Tag	Description
EIMDISC_ACCR	Net Discount Accrual amount for the processing day
EIMDISC_ADJ	Discount accrual refund amount
EIMPREM_ACCR	Net premium accrual amount for processing day
EIMINTADJ_ ACCR	Interest adjustment amount
EIMPREM_ADJ	Premium accrual refund amount

Table 1-5 Entries Maintained for the YACR Event

Accounting Role	Amount Tag	Dr/Cr Indicator
EIMDISCRIA	EIMDISC_ACCR	Debit
EIMDISCINC	EIMDISC_ACCR	Credit
EIMDISCRIA	EIMDISC_ADJ	Debit
CUSTOMER	EIMDISC_ADJ	Credit
CUSTOMER	EIMPREM_ADJ	Debit
EIMPREMPIA	EIMPREM_ADJ	Credit
EIMINTADJREC	EIMINTADJ_ ACCR	Debit
EIMINTADJINC	EIMINTADJ_ ACCR	Credit
EIMPREMEXP	EIMPREM_ACCR	Debit
EIMPREMPIA	EIMPREM_ACCR	Credit

The account head mapped to the accounting role EIMDISCRIA and account heads mapped to the subsystem specific RIA (Received in Advance) accounting roles should be maintained as the same account.

For discount accrual, you must also maintain the following accounting set-up for the Charge Liquidation event. The charge liquidation event is the event in the life of a contract at which the charge is going to be levied; you would have specified this while building a charge class or while attaching a charge class to the product.

Table 1-6 Accounting Roles for LIQD Event

Accounting Role	Description
component_RIA*	Charge amount Received in Advance

Note:

The component_RIA will be replaced by the appropriate Charge Rule

Table 1-7 Amount Tags for the LIQD Event

Amount Tag	Description
component_DISC*	Charge Amount to be discounted
component_PIA	Charge amount paid in advance

Note:

The component is replaced by the appropriate Charge Rule.

Table 1-8 Entries to be Maintained for LIQD Event

Accounting Role	Amount Tag	Dr/Cr Indicator
<Charge rule>_RIA	<Charge rule>_DISC	Credit
CUSTOMER	<Charge rule>_DISC	Debit
<Charge rule>_INC	<Charge rule>_LIQD	Credit
CUSTOMER	<Charge rule>_LIQD	Debit
<Charge rule>_PIA	<Charge rule>_PREM	Debit
CUSTOMER	<Charge rule>_PREM	Credit

Table 1-9 Additional Accounting Entries required for LIQD Event

Accounting Role	Amount Tag	Dr/Cr Indicator
EIMDISCRIA	EIMDISC_ADJ	Debit
CUSTOMER	EIMDISC_ADJ	Credit