Aggregation Account Level and Adjustment Computation

Once the transaction level computations are over, the final computed values are aggregated back to the account level for the final computations. The following values are considered:

• Ending Net Book Value: Value from the last transaction
• Effective Interest Amount: Sum of all Effective Interest Amounts across all transactions
• Compounded Effective Interest Amount: Value from the last transaction

Once the values are aggregated, the final computations to arrive at the Interest Adjustment are done.

• Step 1: The Cumulative Effective Interest Amount is calculated as the sum of the Current Effective Interest Amount and Cumulative Effective Interest Amount of the previous MIS Date.
• Step 2: The Cumulative Interest Adjustment is calculated by subtracting the Actual Interest Accrued to date, Core Banking Interest, from Cumulative Effective interest accrued to date.
• Step 3: The Current Interest Adjustment is calculated by subtracting the Cumulative Interest Adjustment of Previous MIS Date from the Cumulative Interest Adjustment of Current MIS Date.

This value, Current Interest Adjustment, is the adjustment entry that needs to be passed to the accounting systems and reflects the amount of deferred balance that needs to be amortized for the given period.