Accounting Commercial paper

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

Example: If you Issue a Commercial paper

At start

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

Example: You Issue 10 MSEK at the rate of 0,3%.

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. 

Close

If you buy back the commercial paper before maturity date (example below shows a buy back at the rate of 1%). 

Treasury System will keep the maturity accounting but with the date for the buy back. The booking af the checking account will still be done (as an interim booking) but there will be no cash flow. For the actual buy back deal you will credit the checking account with the new discounted amount. Credit the interest (so net it will be the difference between the original deal and the buy back). And finally to even out the checking account the nominal amount will be debit to the checking account.