Examples

D.16 Examples

Example #1

In this example, a “debit only” Constant allocation rule generates a single row in Euros in an environment in which the Functional currency is US dollars.

Table D-2 USD as Functional Currency with Debit Product Output in Euros

Application Data	Nature of Data	Implication
Source Data: Constant value of 100	The input value is constant.	As a constant, the engine treats this as $100 (since USD is the Functional currency).
Driver Data: None	Constant rule types do not support drivers.	There is no driver data.
Debit: One leaf dimension value is supplied for each dimension	Debit: Record is output in Euros to Financial Element = Ending Balance.	Since the Column Property of the Ending Balance Financial Element is “Balance”, the output value is translated and the one row created is denominated in Euros.

In this example, if the USD to EUR exchange rate is $1.2987 per Euro then the allocation rule's Debit produces an output value of €77.00 (100/1.2987).

Example #2

Similar to example #1, in this example a “debit only” Constant allocation rule generates a single row in Currency Code “002 – Non Currency Basis” in an environment the Functional currency is US dollars.

Table D-3 USD as Functional Currency with Debit Product Output in USD

Application Data	Nature of Data	Implication
Source Data: Constant value of 100	The input value is constant.	As a constant, the engine treats this as $100 (since USD is the Functional currency).
Driver Data: None	Constant rule types do not support drivers.	There is no driver data.
Debit: One leaf dimension value is supplied for each dimension	Debit: Record is output to Currency = '002' and to a user-defined Financial Element = Headcount (a statistical Financial Element).	Since the Column Property of the output Financial Element is “Statistic”, the output value is NOT translated and the one row created is denominated in '002', Non-Currency Basis.

In this example, note that even if the allocation had an output to a Balance type Financial Element (Ending Balance, for example), no translation would have occurred since '002' means “No currency basis”. The debit value in this example is 100.

Example #3

Table D-4 Allocation Rule distributes an equal amount of Ledger Level Expense to Instrument Balance Column

Application Data	Nature of Data	Implication
Source Data: Management Ledger for Statement Processing Expense	Various Statement Processing Expenses sourced from the Management Ledger for Checking and Savings products. In this example, all of the Source rows are denominated in USD that is the Functional currency.	No translation is necessary since all of the source expense is already denominated in the functional currency.
Driver Data: Record Count column in the Checking and Savings instrument table	The instrument-level Record Count column has a value of 1 and is intended to assist, among other purposes, as a driver for “equal distribution” kinds of allocation rules. The Column Property of the Record Count column is Numeric.	As a Numeric column, Record Count has a non-currency-specific meaning and therefore, is not translated.
Debit: Instrument level Statement Processing Expense column	In this example, three distinct currencies are found within the Checking and Savings table for the current As-of-Date: USD, EUR, and GBP.	No translation is required for data written to the Statement Processing Expense column for the rows denominated in USD, but translation is required for rows denominated in EUR and GBP.

In this example, we are allocating a pool of ledger-level Statement Processing expenses down to the instrument level for Checking and Savings products. The methodology we have selected is to allocate an equal share of the ledger-level expense to every row in the CASA (Checking and Savings Accounts) table on the assumption that every row generates an equal amount of expense for the bank.

Once completed, we would expect that the total USD-equivalent of the amount of the Statement Processing Expense allocated to the instrument level would be exactly equal to the amount originally sourced from the ledger level.

Example #4

Example #4 is an allocation rule that distributes ledger-level expense to an instrument-level balance column on a percent-to-total basis of another instrument-level balance column.

Table D-5 Allocation Rule distributes Ledger-level expense to an instrument-level Balance Column

Allocation Data	Nature of Data	Implication
Source Data: Management Ledger resident Loan Loss Reserves for Mortgages	All Loan Loss Reserve data for Mortgage products denominated in USD (the Functional currency).	No translation is necessary since all of the source expense is already denominated in the functional currency.
Driver Data: Average Balance column in the Mortgages instrument table (percent-to-total)	The Column Property of the Average Balance column is Balance. In this example, rows are found that are denominated in USD and JPY.	As a Balance column, the Average Balance is translated to the functional currency.
Debit: Instrument level Loan Loss Reserve column	The Column Property of the Loan Loss Reserve column is also Balance.	Once again, translation is required but only for the rows denominated in JPY.

In this example, we started with Source data (ledger-level) Loan Loss Reserve in the amount of $40,000,000 that was to be allocated to detail level data in the Mortgages table for a portfolio of 10,000 USD-denominated loans the total average balance of which was $2 billion; and 10,000 JPY-denominated loans the total average balance of which was ¥ 200 billion. In this case, the current exchange between JPY and USD is 100:1 so the USD equivalent average balance of the JPY mortgage portfolio is equal to the USD mortgage portfolio – each portfolio is valued at 2 billion USD.

Since the JPY and USD portfolios are of equal size, we would expect that each portfolio should receive an equal distribution of total Loan Loss Reserve ($20 million to each portfolio). We expect that each dollar of USD average balances would receive an amount equal to each ¥ 100 of JPY average balances. After the allocation rule had been run, we would expect to find $20 million in allocated Loan Loss Reserve associated with USD mortgage rows and ¥ 2 billion in allocated Loan Loss Reserve associated with JPY mortgage rows.