Accounting Commercial paper

Description of how the accounting of Commercial Paper work in Treasury System.

Example: If you Issue a Commercial paper with Nominal Amount 10 MSEK at the rate of 0,3%.

At start

At start you will debit the checking account and credit your debt account with the Discounted amount of the commercial paper. 

At Maturity

At Maturity you will credit the checking account with the face value (nominal amount), debit the debt account with the discounted value amount and debit your interest account.

Unrealised

At month end Treasury Systems create accounting for the accrued interest. The accounting will be reversed the first day of next month. 

Note! The accrued interest for a commercial paper is calculated the following way:

Total interest amount = 353 128

Days to final maturity original = 112

Accrued days = 4

Accrued interest = 353 128 / 112 * 4 = 12 611,71

Close

If you buy back the Commercial paper before maturity date (example below shows a full buy back at the rate of 1%), you will need to set up Accounting rules for Event Type Close as well. 

Treasury Systems account for the Close at the date for the buy back, no accounting will be made on the original Deal End Date. The Accounting Rule for Commercial Papers must be updated with Accounts for the Event Type Close, where the Interim Checking Account should be the same as the  "usual" Checking Account, and the Close Interest should have P/L accounts. See example below:

Accounting example of the Closed Deal

To read more about how to register a Commercial Paper, see article How to register a Commercial paper

To read more about how to close a Commercial Paper, see article Close a commercial paper