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Amortization of Discount on Term Loan with Payout

Nov 30, 2016 at 09:56 AM

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Objective-Amortization of Discount on Term Loan with Payout: We are using TPM44 to defer discount through Other flows since business wants to manage Debt and Discount separately.

Implementation Scenario- Discount amount is put in “others flow”.

Let’s say on a loan of 100000, for 1 yr period discount is 20000, this is being amortized linearly in this tenure.

Deferral/Amortization of discount on months’ end (20000/12) isdeferred using TPM44 every month.

Issue-Now, when a principal payout happens, let’s say 30000 The pay down on principal is not decreasing the amortization balance (here, 14000) by the same %.

Creating another “other flow” for the remaining discount amount is not effecting net amortized amount.

Please help for the same.

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