Variable Rate Contracts

Variable Rate Contracts Oracle Lease Management (OKL.
H)
An Oracle White Paper February 2006
Variable Rate Contracts
Executive Overview.......................................................................................... 5 Introduction ....................................................................................................... 5 Payment Structure......................................................................................... 5 Rate Change Parameters .............................................................................. 6 Impact of interest rate change..................................................................... 6 Billing.............................................................................................................. 6 Cash Application........................................................................................... 7 Revenue Recognition ................................................................................... 7 Paydown......................................................................................................... 7 Features............................................................................................................... 7 Interest Calculation Basis: Reamort ........................................................... 7 Interest Calculation Basis: Float Factor..................................................... 7 Interest Calculation Basis: Fixed................................................................. 7 Interest Calculation Basis: Float ................................................................. 8 Interest Calculation Basis: Catchup / Cleanup......................................... 8 Revenue Recognition Method: Streams .................................................... 8 Revenue Recognition Method: Estimated and Billed.............................. 8 Revenue Recognition Method: Actual....................................................... 8 Business Scenarios............................................................................................. 8 Lease ............................................................................................................... 8 Recalculate contract payments on an interest rate change ................. 8 Bill additional amount on interest rate change..................................... 9 Loans .............................................................................................................. 9 Recalculate contract payments on an interest rate change ................. 9 Calculate interest billing on applicable rates....................................... 10 Catchup interest on a separate schedule to regular billing ............... 10 Bill fixed amount and reduce principal on receipt of cash............... 11 Recalculate contract payments on an interest rate change and reduce principal on cash receipt........................................................................ 11 Billed interest changes with rate change and reduce principal on receipt of cash......................................................................................... 12 Revolving Loans ......................................................................................... 12 Calculate interest billing on applicable rates....................................... 12 Billed interest changes with rate change and reduce principal on receipt of cash......................................................................................... 13 Sample Contract 1 ........................................................................................... 13 Calculate Interest Billing on Applicable Rates for a Loan .................... 13
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Contract Data.......................................................................................... 14 Transactions ............................................................................................ 16 Pricing ...................................................................................................... 16 Billing and Cash...................................................................................... 18 Interest Calculation ................................................................................ 20 Accounting .............................................................................................. 21 Setups ....................................................................................................... 21 Sample Contract 2 ........................................................................................... 23 Calculate Interest Billing on Applicable Rates for a Revolving Loan . 23 Contract Data.......................................................................................... 24 Transactions ............................................................................................ 25 Pricing ...................................................................................................... 26 Billing and Cash...................................................................................... 26 Interest Calculation ................................................................................ 26 Accounting .............................................................................................. 27 Setups ....................................................................................................... 27 Sample Contract 3 ........................................................................................... 29 Catchup interest on a separate schedule to regular billing for a Loan 29 Contract Data.......................................................................................... 29 Transactions ............................................................................................ 31 Pricing ...................................................................................................... 33 Billing and Cash...................................................................................... 34 Interest Calculation ................................................................................ 35 Accounting .............................................................................................. 36 Setups ....................................................................................................... 37 Sample Contract 4 ........................................................................................... 39 Bill fixed amount and reduce principal on receipt of cash for a Loan 39 Contract Data.......................................................................................... 39 Transactions ............................................................................................ 41 Pricing ...................................................................................................... 42 Billing and Cash...................................................................................... 43 Interest Calculation ................................................................................ 44 Accounting .............................................................................................. 44 Setups ....................................................................................................... 45 Sample Contract 5 ........................................................................................... 47 Recalculate payments on interest rate change for a Lease .................... 47 Contract Data.......................................................................................... 48 Transactions ............................................................................................ 49 Pricing ...................................................................................................... 50 Accounting .............................................................................................. 52 Setups ....................................................................................................... 52 Navigation ........................................................................................................ 53 Accounting .............................................................................................. 53 Accruals ................................................................................................... 54 Billing ....................................................................................................... 54 Booking.................................................................................................... 54
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Early Termination .................................................................................. 55 Funding.................................................................................................... 55 Interest Index.......................................................................................... 55 Lease Center............................................................................................ 55 Paydown .................................................................................................. 56 Period Reversal ....................................................................................... 56 Rebook..................................................................................................... 56 Receipt ..................................................................................................... 56 Streams..................................................................................................... 56 Termination............................................................................................. 56 Conclusion........................................................................................................ 57
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EXECUTIVE OVERVIEW
Lessors offer many types of leases and loans to their customers. Some of them are with a fixed interest rate over the life of the contract, in others the interest rate may change during the contract life. The contracts that permit changes to the interest rate are called variable rate contracts. This whitepaper is intended to provide an overview of the major features and functions enabled in Oracle Lease Management to manage variable rate contracts. Details of this functionality is documented in the user and implementation guides for Oracle Lease Management.
INTRODUCTION
Lease and loan contracts may be managed in Oracle Lease Management. The contracts may have a fixed interest rate applicable through their life or subject to interest rate changes. The processing for interest rate changes is determined on: Payment structure defined on the contract Rate change parameters defined on the contract Impact of rate change Basis of billing Cash application Revenue Recognition
The above determine the type of paydown and early or end of term termination process.
Payment Structure
The payment structure that may be defined on contracts are: Total payment Rent for leases Total payment Principal and interest for loans Total payment not split into principal and interest for loans
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Principal Principal and interest rate for loans Interest only No principal payment for revolving loans
Rate Change Parameters
The interest rate change parameters that may be defined on contracts are: Interest index the index to be evaluated for determining the interest rate Adder rate the value to be added to the interest rate derived from the index Minimum rate the minimum interest rate to be applied Maximum rate the maximum interest rate to be applied Days in month 30 / Actual Days in year 360 / 365 / Actual Rate change frequency, tolerance and start date Rate delay select interest rate for a prior date to the billing date Principal basis apply interest on the scheduled or actual principal Interest start date start interest calculation after the contract start date Interest basis calculate simple or compound interest
Impact of interest rate change
The impact of a change in interest rate may be:

Billing
Calculate interest amount to be billed Recalculate payments on the contract with the interest rate as the yield for the balance period of the contract Calculate differential amounts from the current payment schedule
The basis of billing for loans may be: Bill principal and interest from schedule Bill principal from schedule and calculated interest Bill principal and interest from schedule and adjust interest differential periodically
The basis of billing for leases may be: Bill streams from schedule Bill streams from schedule and additional amount on account of rate change
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Cash Application
The basis of cash application for loans may be: Apply to principal and interest invoices Apply to payment amount and determine split between interest and principal
Revenue Recognition
The basis of revenue recognition may be: Recognize revenue for streams generated Estimate revenue, reverse the estimated revenue and account for interest billed as revenue Calculate actual interest as revenue
Paydown
Unscheduled payments may be made for: Principal Principal and interest
Process paydowns by: Retaining the same term and reducing payments Retaining the payments and reducing the term
FEATURES Interest Calculation Basis: Reamort
Recalculate payments on the contract with the interest rate as the yield for the balance period of the contract Rebook contract with revised payments Bill scheduled streams on the contract
Interest Calculation Basis: Float Factor
Calculate additional amount in excess of current payment schedule Bill streams from schedule and additional amount on account of rate change
Interest Calculation Basis: Fixed
Bill scheduled streams on the contract
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Interest Calculation Basis: Float
Calculate interest amount Bill principal from schedule and calculated interest
Interest Calculation Basis: Catchup / Cleanup
Calculate interest amount Bill principal and interest from schedule and adjust interest differential periodically
Revenue Recognition Method: Streams
Recognize revenue for streams generated
Revenue Recognition Method: Estimated and Billed
Estimate revenue, reverse the estimated revenue and account for interest billed as revenue
Revenue Recognition Method: Actual
Calculate actual interest as revenue Apply the cash received to interest first and the balance to principal
BUSINESS SCENARIOS
Variable rate contracts may be configured as:

Lease
Additional amount is billed on interest rate change for leases The principal on loans reduces on billing The principal on loans reduce on cash receipt
The following variable rate leases may be configured

Recalculate contract payments on an interest rate change
These variable rate contracts may be configured for operating leases, direct finance leases or sales type leases. The significant features of these contracts are: Interest rate changes on payment due date only The payments for the balance term of the contract are recomputed when the interest rate changes The contract is rebooked with the revised payments Rent is billed based on the contract payment schedule Cash is applied to the rent invoices
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Revenue is recognized based on income streams generated on booking or rebooking
Set up the contract with interest calculation basis Remort and revenue recognition method Streams for this type of contract. The program to calculate the interest billing Create Receivables Variable Rate Invoices recalculates the revised payments and rebooks the contract with the new payments on an interest rate change. The revised payments are determined for the balance term of the contract with the interest rate as the expected yield.
Bill additional amount on interest rate change
These variable rate contracts may be configured for operating leases, direct finance leases or sales type leases. The significant features of these contracts are: Interest rate change frequency can be defined by the user Rent is billed based on the contract payment schedule Additional billing amount is calculated by solving a formula defined on the contract Cash is applied to the rent and additional billing amount invoices The additional billing amount is accounted as revenue in addition to the income streams generated
Set up the contract with interest calculation basis Float Factor and revenue recognition method Streams for this type of contract. The program to calculate the interest billing Create Receivables Variable Rate Invoices recalculates the additional amount to be billed by solving the formula defined on the contract.
Loans
The following variable rate loans may be configured.

Recalculate contract payments on an interest rate change
The significant features of these contracts are: Interest rate changes on payment due date only The payments for the balance term of the contract are recomputed when the interest rate changes The contract is rebooked with the revised payments Principal and interest is billed based on the contract payment schedule Cash is applied to the principal and interest invoices Revenue is recognized based on income streams generated on booking or rebooking
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Set up the contract with interest calculation basis Remort and revenue recognition method Streams for this type of contract. The program to calculate the interest billing Create Receivables Variable Rate Invoices recalculates the revised payments and rebooks the contract with the new payments on an interest rate change. The revised payments are determined for the balance term of the contract with the interest rate as the expected yield.
Calculate interest billing on applicable rates
The significant features of these contracts are: Interest rate change frequency can be defined by the user The interest is calculated for billing on the scheduled billing date. The interest may be calculated in scheduled or actual principal balance Principal is billed on the original schedule Interest is billed on the variable interest billing schedule. The interest may be billed on a different date to principal Cash received is applied to principal and interest invoices Income is estimated from the last billed date to the accounting period close. The estimated income is reversed in the next accounting period. Interest billed is accounted as income.
Set up the contract with interest calculation basis Float and revenue recognition method Estimated and Billed for this type of contract. The program to calculate the interest billing Create Receivables Variable Rate Invoices calculates the interest amount to be billed. The program to accrue Generate Accrual Estimated and Billed estimates the income from the last billing date to accounting period end and determines the interest bills not accrued to create accounting. The program Period Reversal reverses the prior accounting periods estimated income.
Catchup interest on a separate schedule to regular billing
The significant features of these contracts are: Interest rate change frequency can be defined by the user Principal and interest is billed based on the contract payment schedule The actual interest is calculated on a separate schedule for catchup of interest. The difference between interest billed and actual interest is billed or excess interest may be reduced from the principal balance, refunded or retained till termination Cash received is applied to principal and interest invoices The scheduled and catchup interest billed is accounted as income
Set up the contract with interest calculation basis Catchup / Cleanup and revenue recognition method Streams for this type of contract. The program to calculate
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the interest billing Create Receivables Variable Rate Invoices on the catchup schedule determines the actual interest to be applied on the contract and billed interest to determine the difference to be billed or adjusted from principal, refunded or retained till termination
Bill fixed amount and reduce principal on receipt of cash
The significant features of these contracts are: Interest rate change frequency can be defined by the user Total payment (not split into principal and interest) is billed based on the contract payment schedule Cash received is applied to the total payment The cash applied to invoices is applied to interest and the remaining amount applied to principal. The actual principal is used to determine the interest. The actual interest is calculated to account for income.
Set up the contract with interest calculation basis Fixed and revenue recognition method Actual for this type of contract. The program Daily Interest calculates the amount of the receipt to be accounted as interest and principal. The program Generate Accrual - Actual calculates the actual interest to be accounted as income.
Recalculate contract payments on an interest rate change and reduce principal on cash receipt
The significant features of these contracts are: Interest rate changes on payment due date only The payments for the balance term of the contract are recomputed when the interest rate changes The contract is rebooked with the revised payments Total payment (not split into principal and interest) is billed based on the contract payment schedule Cash received is applied to the total payment The cash applied to invoices is applied to interest and the remaining amount applied to principal. The actual principal is used to determine the interest. The actual interest is calculated to account for income.
Set up the contract with interest calculation basis Remort and revenue recognition method Actual for this type of contract. The program to calculate the interest billing Create Receivables Variable Rate Invoices recalculates the revised payments and rebooks the contract with the new payments on an interest rate change. The
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revised payments are determined for the balance term of the contract with the interest rate as the expected yield. The program Daily Interest calculates the amount of the receipt to be accounted as interest and principal. The program Generate Accrual - Actual calculates the actual interest to be accounted as income.
Billed interest changes with rate change and reduce principal on receipt of cash
The significant features of these contracts are: Interest rate change frequency can be defined by the user The interest is calculated for billing on the scheduled billing date. The scheduled principal and interest calculated are combined to determine the total payment billed. Cash received is applied to the total payment The cash applied to invoices is applied to interest and the remaining amount applied to principal. The actual principal is used to determine the interest. The actual interest is calculated to account for income.
Set up the contract with interest calculation basis Float and revenue recognition method Actual for this type of contract. The program to calculate the interest billing Create Receivables Variable Rate Invoices calculates the interest amount and determines the total payment to be billed by combining the scheduled principal and calculated interest. The program Daily Interest calculates the amount of the receipt to be accounted as interest and principal. The program Generate Accrual Actual calculates the actual interest to be accounted as income.
Revolving Loans
The following variable rate revolving loans may be configured

Calculate interest billing on applicable rates
The significant features of these contracts are: Interest rate change frequency can be defined by the user The interest is calculated for billing on the scheduled billing date. Cash received is applied to interest invoices Income is estimated from the last billed date to the accounting period close. The estimated income is reversed in the next accounting period. Interest billed is accounted as income.
Set up the contract with interest calculation basis Float and revenue recognition method Estimated and Billed for this type of contract. The program to calculate the interest billing Create Receivables Variable Rate Invoices calculates the interest
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amount to be billed. The program to accrue Generate Accrual Estimated and Billed estimates the income from the last billing date to accounting period end and determines the interest bills not accrued to create accounting. The program Period Reversal reverses the prior accounting periods estimated income.
Billed interest changes with rate change and reduce principal on receipt of cash
The significant features of these contracts are: Interest rate change frequency can be defined by the user The interest is calculated and billed as total payment. Cash received is applied to the total payment The cash applied to invoices is applied to interest and the remaining amount applied to principal. The actual principal is used to determine the interest. The actual interest is calculated to account for income.
Set up the contract with interest calculation basis Float and revenue recognition method Actual for this type of contract. The program to calculate the interest billing Create Receivables Variable Rate Invoices calculates the interest amount and determines the total payment to be billed by combining the scheduled principal and calculated interest. The program Daily Interest calculates the amount of the receipt to be accounted as interest and principal. The program Generate Accrual Actual calculates the actual interest to be accounted as income.
SAMPLE CONTRACT 1 Calculate Interest Billing on Applicable Rates for a Loan
A loan contract may be configured with the following: Principal payment and interest rate Interest rate changes based on the index and contract setup The interest is calculated for billing on the scheduled billing date on the scheduled principal balance. Principal is billed on the original schedule Interest is billed on the variable interest billing schedule. The interest and principal are billed on the same schedule.
This contract is classified as: Interest Calculation Basis Float Revenue Recognition Method Estimated and Billed
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Contract Data
Sample contract data is: Field Contract Header Contract Name Description Customer Name Customer Number Contract Start Date Contract End Date Term (Months) Product Book Classification Tax Owner Interest Calculation Basis Revenue Recognition Basis Assets Item Asset Unit Cost Quantity Installed Site Item Asset Unit Cost Unit Cost Installed Site Payment Schedule Server 1 12,000 1 New York Computer 2 6,000 1 New York Loan Float Estimated Billed Loan Contract Float, Estimated and Billed Mahali Holdings Inc 2078 15-Jul-2004 14-Jul-2005 12 Loan Float Estimated Billed Loan Lessee Float Estimated and Billed Value
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Contract Line Type Asset Payment Type (Stream) Advance / Arrears Frequency # of periods Amount Contract Line Type Asset Payment Type (Stream) Advance / Arrears Frequency # of periods Amount Payment Type (Stream) Advance / Arrears Frequency # of periods Amount Payment - Rates Effective From Index Name Base Rate Adder Rate Minimum Rate Maximum Rate Principal Basis Interest Basis
Financial Asset Line 1 Principal Payment Arrears Monthly 12 1,000 Financial Asset Line 2 Principal Payment Arrears Monthly 12 500 Variable Interest Schedule Arrears Monthly 12 0
15-Jul-2004 Monthly Rate 6 0 5 9 Scheduled Simple
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Interest Start Date Days in a Month Days in a Year
15-Jul-2004 30 360
Additional Parameters
Rate Change Frequency Rate Change Start Date Rate Change Value Daily 15-Jul-2004 0
Transactions
The following transactions have been performed on the contract: Date 15-Jul-04 30-Jul-04 1-Aug-04 15-Aug-04 15-Aug-04 31-Aug-04 31-Aug-04 Transaction Booking Estimated Accrual Estimated Accrual Reversal Billing Receipt Actual Accrual Estimated Accrual Verify Streams, Accounting, Lease Center Accrual Report, Accounting Accounting Receivables, Accounting, Lease Center Receivables, Accounting, Lease Center Accrual Report, Accounting Accrual Report, Accounting
Pricing
Yields
The yields generated on booking are: Pre Tax Internal Rate of Return 5.9990 After Tax Internal Rate of Return 3.9110 Implicit Interest Rate 5.9990 Accounting Yield 6.0000
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The streams generated on contract booking are:
Payment Streams
Date Principal Payment (Billable) Asset # 1 15-Jul-2004 15-Aug-2004 15-Sep-2004 15-Oct-2004 15-Nov-2004 15-Dec-2004 15-Jan-2005 15-Feb-2005 15-Mar-2005 15-Apr-2005 15-May-2005 15-Jun-2005 15-Jul-2005 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 60.00 55.00 50.00 45.00 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 1,060.00 1,055.00 1,050.00 1,045.00 1,040.00 1,035.00 1,030.00 1,025.00 1,020.00 1,015.00 1,010.00 1,050.00 12,000.00 11,000.00 10,000.00 9,000.00 8,000.00 7,000.00 6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 0.00 Interest Payment (Non Billable) Loan Payment (Non Billable) Principal Payment (Non Billable)
Asset # 2 15-Jul-2004 15-Aug-2004 15-Sep-2004 15-Oct-2004 15-Nov-2004 15-Dec-2004 15-Jan-2005 15-Feb-2005 15-Mar-2005 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 30.00 27.50 25.00 22.50 20.00 17.50 15.00 12.50 530.00 527.50 525.00 522.50 520.00 517.50 515.00 512.50 6,000.00 5,500.00 5,000.00 4,500.00 4,000.00 3,500.00 3,000.00 2,500.00 2,000.00
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15-Apr-2005 15-May-2005 15-Jun-2005 15-Jul-2005
500.00 500.00 500.00 500.00
10.00 7.50 5.00 2.50
510.00 507.50 505.00 502.50
1,500.00 1,000.00 50.00 0.00
Accrual Streams
Date Interest Income (Non Accrual) Asset #1 30-Jul-2004 30-Aug-2004 30-Sep-2004 30-Oct-2004 30-Nov-2004 30-Dec-2004 30-Jan-2005 28-Feb-2005 30-Mar-2005 30-Apr-2005 30-May-2005 30-Jun-2005 30-Jul-2005 32.00 57.33 52.33 47.33 42.33 37.33 32.33 27.33 22.33 17.33 12.33 7.33 2.37 Interest Income (Non Accrual) Asset # 2 16.00 28.67 26.17 23.67 21.17 18.67 16.17 13.67 11.17 8.67 6.17 3.67 1.13
Billing and Cash
The billing and cash transactions are:
Billing
Date Event Stream Type Principal Billing (Principal Interest Billing (Variable Principal Balance
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Payment) 15-Jul-2004 15-Aug-2004 15-Sep-2004 15-Oct-2004 15-Nov-2004 15-Dec-2004 15-Jan-2005 15-Feb-2005 15-Mar-2005 15-Apr-2005 15-May-2005 15-Jun-2005 15-Jul-2005 Booking Billing 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00
Interest) 18,000.00 127.99 103.58 81.67 62.25 50.00 43.75 41.00 40.42 37.33 31.75 22.50 11.25 16,500.00 15,000.00 13,500.00 12,000.00 10,500.00 9,000.00 7,500.00 6,000.00 4,500.00 3,000.00 1,500.00 0.00
Billing Billing Billing Billing Billing Billing Billing Billing Billing Billing Billing
Event Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt
Receipts
Date 15-Aug-2004 15-Sep-2004 15-Oct-2004 15-Nov-2004 15-Dec-2004 15-Jan-2005 15-Feb-2005 15-Mar-2005 15-Apr-2005 15-May-2005 15-Jun-2005 15-Jul-2005 Principal Receipt 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 Interest Receipt 127.99 103.58 81.67 62.25 50.00 43.75 41.00 40.42 37.33 31.75 22.50 11.25 Total Receipt 1,627.99 1,603.58 1,581.67 1,562.25 1,550.00 1,543.75 1,541.00 1,540.42 1,537.33 1,531.75 1,522.50 1,511.25
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Interest Calculation
The calculation for interest billing is: Date 31-Jul-2004 15-Aug-2004 Total 31-Aug-2004 15-Sep-2004 Total 30-Sep-2004 15-Oct-2004 Total 31-Oct-2004 15-Nov-2004 Total 30-Nov-2004 15-Dec-2004 Total 31-Dec-2004 15-Jan-2005 Total 31-Jan-2005 15-Feb-2005 Total 28-Feb-2005 15-Mar-2005 Total 31-Mar-2005 15-Apr-2005 Total 6,000.00 6,000.00 7% 8% 16 / 360 14 / 360 7,500.00 7,500.00 6% 7% 16 / 360 14 / 360 9,000.00 9,000.00 5% 6% 16 / 360 14 / 360 10,500.00 10,500.00 5% (min rate) 5% 16 / 360 14 / 360 12,000.00 12,000.00 5% 5% (min rate) 16 / 360 14 / 360 13,500.00 13,500.00 6% 5% 16 / 360 14 / 360 15,000.00 15,000.00 7% 6% 16 / 360 14 / 360 16,500.00 16,500.00 8% 7% 16 / 360 14 / 360 Principal Balance 18,000.00 18,000.00 Rate 9% 8% Number of Days 16 / 360 14 / 360 Amount 72.00 55.99 127.99 58.66 44.92 103.58 46.67 35.00 81.67 36.00 26.25 62.25 26.67 23.33 50.00 23.33 20.42 43.75 20.00 21.00 41.00 20.00 20.42 40.42 18.67 18.66 37.33
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30-Apr-2005 15-May-2005 Total 31-May-2005 15-Jun-2005 Total 30-Jun-2005 15-Jul-2005 Total
4,500.00 4,500.00
8% 9%
16 / 360 14 / 360
16.00 15.75 31.75
3,000.00 3,000.00
9% 9% (max rate)
16 / 360 14 / 360
12.00 10.50 22.50
1,500.00 1,500.00
9% (max rate) 9%
16 / 360 14 / 360
6.00 5.25 11.25
Accounting
The accounting for the contract is: Date 15-Jul-2004 31-Jul-2004 1-Aug-2004 Event Booking Estimated Accrual Estimated Accrual Reversal Billing Receipt Actual Accrual Estimated Accrual (1,500.00) 1627.99 (1627.99) 127.99 68.00 (127.99) (68.00) Loan Principal 18,000.00 Lease Funding (18,000.00) 72.00 (72.00) (72.00) 72.00 Receivables Revenue Clearing Loan Interest Income Bank
15-Aug-2004 15-Aug-2004 31-Aug-04 31-Aug-2004
(127.99) 1627.99
Setups
Streams
Define stream types for the stream purposes: Interest Income Interest Payment (Non Billable)
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Loan Payment (Non Billable) Principal Balance Principal Payment Unscheduled Principal Paydown Variable Interest Variable Interest Schedule Variable Interest Income
Stream Generation Template

Interest Calculation Basis Float Revenue Recognition Method Estimated and Billed
Update stream generation template for: Stream Purpose Interest Income Interest Payment Loan Payment Principal Balance Principal Payment Unscheduled Principal Paydown Variable Interest Variable Interest Schedule Variable Interest Stream Type Interest Income Interest Payment Loan Payment Principal Balance Principal Payment Unscheduled Principal Paydown Variable Interest Variable Interest Schedule Variable Interest Primary N Primary Stream Type Rent Pricing Name Single Lending Loan Accrual Lending Loan Interest Lending Loans Principal Principal Paydowns -
N N N N
Rent Rent Rent Rent
Rent
Y Y
Variable Interest
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Income
Income
Accounting Template Set

Update accounting template set for: Stream Type Principal Payment Unscheduled Principal Paydown Variable Interest Stream Purpose Principal Payment Unscheduled Principal Paydown Variable Interest Transaction Type Billing Billing Memo No No Formula -
Accrual Billing
No No No
VARIABLE_ INCOME_ ACCRUAL -
Variable Interest Income Principal Payment
Variable Interest Income Principal Payment
Accrual
Billing
No
Financial Product
Interest Calculation Basis Float Revenue Recognition Method Estimated and Billed Accrual Stream Variable Interest Income, Variable Interest
SAMPLE CONTRACT 2 Calculate Interest Billing on Applicable Rates for a Revolving Loan
A loan contract may be configured with the following: No scheduled principal payment Interest rate changes based on the index and contract setup Interest is calculated and billed on the variable interest billing schedule.
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Cash received is applied to interest invoices or unscheduled principal payment Cash receipt of unscheduled principal payments reduce principal balance Income is estimated from the last billed date to the accounting period close. The estimated income is reversed in the next accounting period. Interest billed is accounted as income.
This contract is classified as: Interest Calculation Basis Float Revenue Recognition Method Estimated and Billed
Contract Data
Sample contract data is: Field Contract Header Contract Name Description Customer Name Customer Number Contract Start Date Contract End Date Term (Months) Product Book Classification Tax Owner Interest Calculation Basis Revenue Recognition Basis Credit Line Parties Role Name Pay Site Lease Vendor Mahali Holdings Inc New York Revolving Loan Float Estimated Billed Revolving Loan Contract Float, Estimated and Billed Mahali Holdings Inc 2078 01-Jul-2005 30-Sep-2005 3 Revolving Loan Float Estimated Billed Revolving Loan Lessee Float Estimated and Billed Revolving Credit Line for Mahali Value
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Payment Schedule Payment Type (Stream) Advance / Arrears Frequency # of periods Amount Payment - Rates Effective From Index Name Base Rate Adder Rate Minimum Rate Maximum Rate Principal Basis Interest Basis Interest Start Date Days in a Month Days in a Year 01-Jul-2005 Monthly Rate 6 0 5 10 Actual Simple 01-Jul-2005 30 360 Variable Interest Schedule Arrears Monthly 3 0
Transactions
The following transactions have been performed on the contract: Date 01-Jul-2005 Transaction Booking Verify Streams, Accounting, Lease Center
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01-Jul-2005 31-Jul-2005 31-Jul-2005 31-Jul-2005 15-Aug-2005
Funding Billing Receipt Actual Accrual Principal Paydown
Payables, Accounting, Lease Center Receivables, Accounting, Lease Center Receivables, Accounting, Lease Center Accrual Report, Accounting Contract Payments, Streams, Accounting, Lease Center
Pricing
Yields are not generated on booking Payment and accrual streams are not generated on booking.
Billing and Cash
Billing and Receipts

Date Event Stream Type 01-Jul-2005 01-Jul-2005 31-Jul-2005 31-Jul-2005 15-Aug-2005 16-Aug-2005 16-Aug-2005 Booking Principal Billing (Principal Payment) Interest Billing (Variable Interest) 0.00 25,000.00 187.50 (187.50) 1,000.00 (1,000.00) 25,000.00 25,000.00 24,000.00 25,000.00 Principal Balance
Funding Billing Receipt Principal Paydown Receipt Cash Applied to Principal Paydown
The calculation for interest billing is:
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Date 31-Jul-2005
Principal Balance 25,000.00
Rate 9%
Number of Days 30/360
Amount 187.50
Accounting
The accounting for the contract is: Date 01-Jul-2005 01-Jul-2005 01-Jul-2005 31-Jul-2005 31-Jul-2005 31-Jul-2005 15-Aug-2005 15-Aug-2005 Event Booking Funding Payment Billing Receipt Accrual Principal Paydown Receipt (1,000.00) 1,000.00 (1,000.00) 1,000.00 25,000.00 (25,000.00) 25,000.00 187.50 (187.50) 187.50 (187.50) (187.50) 187.50 (25,000.00) Loan Principal Lease Funding Receivables Revenue Clearing Loan Interest Income Bank
Setups
Streams
Define stream types for the stream purposes: Interest Income Interest Payment (Non Billable) Loan Payment (Non Billable) Principal Balance Principal Payment (Non Billable) Variable Interest Variable Interest Schedule Variable Interest Income Unscheduled Principal Payment
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Interest Calculation Basis Float Revenue Recognition Method Estimated and Billed
Update stream generation template for: Stream Purpose Interest Income Interest Payment Loan Payment Principal Balance Principal Payment Variable Interest Variable Interest Schedule Variable Interest Income Unscheduled Principal Payment Principal Balance Stream Type Interest Income Interest Payment Loan Payment Principal Balance Principal Payment Variable Interest Variable Interest Schedule Variable Interest Income Unscheduled Principal Payment Principal Balance Primary N N N N N Y Y Primary Stream Type Rent Rent Rent Rent Rent Pricing Name -
Variable Interest Rent
Principal Paydowns Lending Loans Balance
Rent

Update accounting template set for: Stream Type Variable Stream Purpose Variable Transaction Type Accrual Memo No Formula -
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Interest
Interest Billing No No VARIABLE_ INCOME_ ACCRUAL -
Variable Interest Income Unscheduled Principal Payment Principal Balance
Variable Interest Income Unscheduled Principal Payment Principal Balance
Accrual
Billing
No
Funding
No
Financial Product
Interest Calculation Basis Float Revenue Recognition Method Estimated and Billed Accrual Stream Variable Interest Income, Variable Interest
SAMPLE CONTRACT 3 Catchup interest on a separate schedule to regular billing for a Loan
A loan contract may be configured with the following: Total payment Interest rate changes based on the index and contract setup Principal and interest is billed on the original schedule The actual interest is calculated on a separate schedule for catchup of interest. The difference between scheduled interest billed and actual interest is billed as catchup. Cash received is applied to principal and interest invoices The scheduled income streams and catchup interest billed is accounted as income
This contract is classified as: Interest Calculation Basis Catchup / Cleanup Revenue Recognition Method Streams
Contract Data
Sample contract data is: Field Value
Page 29
Contract Header Contract Name Description Customer Name Customer Number Contract Start Date Contract End Date Term (Months) Product Book Classification Tax Owner Interest Calculation Basis Revenue Recognition Basis Assets Item Asset Unit Cost Quantity Installed Site Payment Schedule Contract Line Type Asset Payment Type (Stream) Advance / Arrears Frequency # of periods Amount Financial Asset Line 1 Rent Arrears Monthly 12 870 Computer 1 10,000 1 New York Loan Catchup Cleanup Streams Loan Contract Catchup Cleanup, Streams Mahali Holdings Inc 2078 15-Jan-2005 14-Jan-2006 12 Loan Catchup Cleanup Streams Loan Lessee Catchup / Cleanup Streams
Page 30
Payment - Rates Effective From Index Name Base Rate Adder Rate Minimum Rate Maximum Rate Principal Basis Interest Basis Interest Start Date Days in a Month Days in a Year 15-Jan-2005 Monthly Rate 5 1 5 10 Actual Simple 15-Jan-2005 30 360
Catchup Frequency Catchup Start Date Catchup Settlement Catchup Basis Rate Change Frequency Rate Change Start Date Rate Change Value Quarterly 15-Jan-2005 Credit Actual Daily 15-Jan-2005 0
Transactions
The following transactions have been performed on the contract: Date 15-Jan-2005 15-Jan-2005 30-Jan-2005 15-Feb-2005 Transaction Booking Catchup Accrual Billing Verify Streams, Accounting, Lease Center Streams, Receivables, Accounting Accrual Report, Accounting Receivables, Accounting, Lease
Page 31
Center 15-Feb-2005 28-Feb-2005 15-Mar-2005 15-Mar-2005 30-Mar-2005 15-Apr-2005 15-Apr-2005 15-Apr-2005 30-Apr-2005 15-May-2005 15-May-2005 30-May-2005 15-Jun-2005 15-Jun-2005 30-Jun-2005 15-Jul-2005 15-Jul-2005 15-Jul-2005 30-Jul-2005 30-Jul-2005 Receipt Accrual Billing Receipt Accrual Billing Receipt Catchup Accrual Billing Receipt Accrual Billing Receipt Accrual Billing Receipt Catchup Accrual Principal Paydown Receivables, Accounting, Lease Center Accrual Report, Accounting Receivables, Accounting, Lease Center Receivables, Accounting, Lease Center Accrual Report, Accounting Receivables, Accounting, Lease Center Receivables, Accounting, Lease Center Streams, Receivables, Accounting Accrual Report, Accounting Receivables, Accounting, Lease Center Receivables, Accounting, Lease Center Accrual Report, Accounting Receivables, Accounting, Lease Center Receivables, Accounting, Lease Center Accrual Report, Accounting Receivables, Accounting, Lease Center Receivables, Accounting, Lease Center Streams, Receivables, Accounting Accrual Report, Accounting Contract Payments, Streams, Accounting, Lease Center
Page 32
Pricing
Yields
Payment Streams
Date Principal Payment (Billable) Interest Payment (Billable) Loan Payment (Non Billable) Principal Payment (Non Billable)
15-Jan-2005 15-Feb-2005 15-Mar-2005 15-Apr-2005 15-May-2005 15-Jun-2005 15-Jul-2005 15-Aug-2005 15-Sep-2005 15-Oct-2005 15-Nov-2005 15-Dec-2005 15-Jan-2006 803.12 808.50 813.90 819.35 824.82 830.34 835.89 841.48 847.11 852.78 858.48 864.23 66.88 61.50 56.10 50.65 45.18 39.66 34.11 28.52 22.89 17.22 11.52 5.77 870.00 870.00 870.00 870.00 870.00 870.00 870.00 870.00 870.00 870.00 870.00 870.00
10,000.00 9,196.88 8,388.38 7,574.48 6,755.13 5,930.31 5,099.97 4,264.07 3,422.59 2,575.48 1,722.70 864.22 (0.02)
Accrual Streams
Page 33
Date
Interest Income (Accrual)
30-Jan-2005 28-Feb-2005 30-Mar-2005 30-Apr-2005 30-May-2005 30-Jun-2005 30-Jul-2005 30-Aug-2005 30-Sep-2005 30-Oct-2005 30-Nov-2005 30-Dec-2005 30-Jan-2006
35.67 64.01 58.62 53.19 47.73 42.23 36.70 31.12 25.51 19.87 14.18 8.46 2.71
Billing and Cash
Billing and Cash

Date 15-Jan-2005 15-Jan-2005 15-Feb-2005 15-Feb-2005 15-Mar-2005 15-Mar-2005 15-Apr-2005 15-Apr-2005 15-Apr-2005 Event Booking Catchup Billing Receipt 803.12 (803.12) 808.50 (808.50) 813.90 (813.90) 1.66 66.88 (66.88) 61.50 (61.50) 56.10 (56.10) (13.98) Principal Billing Interest Billing Principal Balance 10,000.00 10,000.00 10,000.00 9,196.88 9,196.88 8,388.38 8,388.38 7,574.48 7,574.48
Billing
Receipt
Billing
Receipt Catchup
Page 34
15-May-2005 15-May-2005 15-Jun-2005 15-Jun-2005 15-Jul-2005 15-Jul-2005 15-Jul-2005 30-Jul-2005 30-Jul-2005 30-Jul-2005
Billing Receipt Billing Receipt Billing Receipt

Catchup
819.35 (819.35) 824.82 (824.82) 830.34 (830.34)
50.65 (50.65) 45.18 (45.18) 39.66 (39.66) 29.46
7,574.48 6,755.13 6,755.13 5,930.31 5,930.31 5,099.97 5,099.97 5,099.97 4,099.97
Principal Paydown Receipt Rebook Adjustment
1,000.00 (1,000.00) (64.16) 64.16
4,164.13
The calculation for interest catchup billing is: Date 15-Jan2005 Total 31-Jan2005 14-Feb2005 28-Feb2005 14-Mar2005 31-Mar2005 14-Apr2005 15-Apr2005 10,000.00 10,000.00 9,196.88 9,196.88 8,388.38 8,388.38 7,574.48 6% 7% 7% 8% 8% 9% 9% 15 / 360 14 / 360 16 / 360 14 / 360 16 / 360 14 / 360 1 / 360 Principal Balance 10,000.00 Rate 6% Number of Days 1 / 360 Amount 1.66 1.66 25.00 27.22 28.61 28.61 29.82 29.35 1.89 56.10 61.50 66.88 0.00 1.66 Billed Interest Catchup
Page 35
Total 30-Apr2005 14-May2005 31-May2005 14-Jun2005 30-Jun2005 14-Jul2005 15-Jul2005 Total 7,574.48 7,574.48 6,755.13 6,755.13 5,930.31 5,930.31 5,099.97 9% 10% 10% 10% (max rate) 10% (max rate) 10% 10% 15 / 360 14 / 360 16 / 360 14 / 360 16 / 360 14 / 360 1 / 360
170.50 28.40 29.45 30.02 26.26 26.35 23.06 1.41 164.95
184.48
(13.98)
50.65
45.18
39.66 135.49 29.46
Accounting
The accounting for the contract is: Date 15-Jan-2005 15-Jan-2005 15-Jan-2005 30-Jan-2005 15-Feb-2005 15-Feb-2005 28-Feb-2005 15-Mar-2005 15-Mar-2005 30-Mar-2005 15-Apr-2005 15-Apr-2005 Event Booking Catchup Catchup Accrual Billing Receipt Accrual Billing Receipt Accrual Billing Receipt (813.90) 870.00 (870.00) (808.50) 870.00 (870.00) 58.62 (56.10) 870.00 (58.62) (803.12) 870.00 (870.00) 64.01 (61.50) 870.00 (64.01) Loan Principal 10,000.00 Lease Funding (10,000.00) 1.66 (1.66) 1.66 35.67 (66.88) 870.00 (1.66) (35.67) Receivables Revenue Clearing Loan Interest Income Bank
Page 36
15-Apr-2005
Catchup
(13.98)
13.98 (13.98) 13.98 (53.19)
30-Apr-2005 15-May-2005 15-May-2005 30-May-2005 15-Jun-2005 15-Jun-2005 30-Jun-2005 15-Jul-2005 15-Jul-2005 15-Jul-2005
Accrual Billing Receipt Accrual Billing Receipt Accrual Billing Receipt Catchup (830.34) 870.00 (870.00) 29.46 (824.82) 870.00 (870.00) (819.35) 870.00 (870.00)
53.19 (50.65)
870.00 47.73 (45.18) 870.00 42.23 (39.66) 870.00 (29.46) 29.46 (29.46) (36.70) (42.23) (47.73)
30-Jul-2005 30-Jul-2005 30-Jul-2005
Accrual Principal Paydown Rebook 64.16 (1,000.00) 1,000.00 64.16 (64.16)
36.70
(64.16)
66.97 30-Jul-2005 Receipt (1,000.00)
(66.97) 1,000.00
Setups
Streams
Define stream types for the stream purposes: Interest Catchup Interest Income Interest Payment Loan Payment (Non Billable) Principal Balance Principal Catchup (Non Billable) Principal Payment
Page 37
Unscheduled Principal Paydown

Interest Calculation Basis Catchup / Cleanup Revenue Recognition Method Streams
Update stream generation template for: Stream Purpose Interest Catchup Interest Income Interest Payment Loan Payment Principal Balance Principal Catchup Principal Payment Unscheduled Principal Payment Stream Type Interest Catchup Interest Income Interest Payment Loan Payment Principal Balance Principal Catchup Principal Payment Unscheduled Principal Payment Primary N N Primary Stream Type Rent Rent Pricing Name Single Lending Loan Accrual Lending Loans Interest Lending Loans Principal Principal Paydown
N N N N N
Rent Rent Rent Rent Rent
Rent

Update accounting template set for: Stream Type Interest Catchup Stream Purpose Interest Catchup Transaction Type Billing Accrual Interest Interest Accrual Memo No No No Formula -
Page 38
Income Interest Payment Principal Payment Unscheduled Principal Payment
Income Interest Payment Principal Payment Unscheduled Principal Payment Billing Billing Billing No No No -
Financial Product
Interest Calculation Basis Catchup / Cleanup Revenue Recognition Method Streams Accrual Stream Interest Income, Interest Catchup
SAMPLE CONTRACT 4 Bill fixed amount and reduce principal on receipt of cash for a Loan
A loan contract may be configured with the following: Interest rate change frequency can be defined by the user Total payment (not split into principal and interest) is billed based on the contract payment schedule Cash received is applied to the total payment The cash applied to invoices is applied to interest and the remaining amount applied to principal. The actual principal is used to determine the interest. The actual interest is calculated to account for income.
This contract is classified as: Interest Calculation Basis Fixed Revenue Recognition Method Actual
Contract Data
Sample contract data is: Field Contract Header Contract Name Loan Fixed Actual Value
Page 39
Description Customer Name Customer Number Contract Start Date Contract End Date Term (Months) Product Book Classification Tax Owner Interest Calculation Basis Revenue Recognition Basis Assets Item Asset Unit Cost Quantity Installed Site Payment Schedule Contract Line Type Asset Payment Type (Stream) Advance / Arrears Frequency # of periods Amount # of periods Amount
Loan Contract Fixed, Actual Mahali Holdings Inc 2078 15-Jul-2005 14-Jul-2006 12 Loan Fixed Actual Loan Lessee Fixed Actual
Server 1 10,000 1 New York
Financial Asset Line 1 Non Billable Principal Payment Arrears Monthly 11 833.00 1 837.00
Page 40
Payment - Rates Effective From Index Name Base Rate Adder Rate Minimum Rate Maximum Rate Principal Basis Interest Basis Interest Start Date Days in a Month Days in a Year 15-Jul-2005 Monthly Rate 9 1 5 10 Actual Simple 15-Jul-2005 30 360
Transactions
The following transactions have been performed on the contract: Date 15-Jul-05 31-Jul-05 15-Aug-05 01-Aug-05 01-Aug-05 31-Aug-05 15-Sep-05 Transaction Booking Actual Accrual Billing Receipt Daily Interest Actual Accrual Billing Verify Streams, Accounting, Lease Center Accrual Report, Accounting Receivables, Accounting, Lease Center Receivables, Accounting, Lease Center Streams, Accounting, Lease Center Accrual Report, Accounting Receivables, Accounting, Lease
Page 41
Center 01-Sep-05 01-Sep-05 15-Oct-05 30-Sep-05 Receipt Daily Interest Billing Actual Accrual Receivables, Accounting, Lease Center Streams, Accounting, Lease Center Receivables, Accounting, Lease Center Accrual Report, Accounting
Note: Receipts have been entered before bills were raised

Pricing
Yields
Payment Streams
Date Principal Payment (Non Billable) 15-Jul-2005 15-Aug-2005 15-Sep-2005 15-Oct-2005 15-Nov-2005 15-Dec-2005 15-Jan-2006 15-Feb-2006 15-Mar-2006 15-Apr-2006 833.00 833.00 833.00 833.00 833.00 833.00 833.00 833.00 833.00 75.00 68.75 62.51 56.26 50.01 43.76 37.52 31.27 25.02 908.00 901.75 895.51 889.26 883.01 876.76 870.52 864.27 858.02 Interest Payment (Non Billable) Loan Payment (Billable) Principal Balance (Non Billable) 10,000.00 9,167.00 8,334.00 7,501.00 6,668.00 5,835.00 5,002.00 4,169.00 3.336.00 2,503.00
Page 42
15-May-2006 15-Jun-2006 15-Jul-2006
833.00 833.00 837.00
18.77 12.53 6.27
851.77 845.53 843.27
1,670.00 837.00 0.00
Accrual Streams
Date Interest Income (Non Accrual) 30-Jul-2005 30-Aug-2005 30-Sep-2005 30-Oct-2005 30-Nov-2005 30-Dec-2005 30-Jan-2006 28-Feb-2006 30-Mar-2006 30-Apr-2006 30-May-2006 30-Jun-2006 30-Jul-2006 40.00 71.67 65.42 59.17 52.93 46.68 40.43 34.18 27.94 21.69 15.44 9.19 2.92
Billing and Cash
Billing and Receipts

Date Event (Stream Type) 01-Aug-2005 Receipt Principal (Daily Interest Principal) 863.56 Interest (Daily Interest Interest) 44.44 Total (Loan Payment) 908.00
Page 43
15-Jul-2005 01-Sep-2005 15-Aug-2005
Billing
908.00 833.23 68.52 901.75 901.75
Receipt Billing
The calculation for interest billing is: Date 01-Aug-2005 Less: 01-Aug-2005 Principal Balance 10,000.00 Accrued Total Rate 10% Number of Days 16 / 360 Amount 44.44 44.44
01-Aug-2005 01-Sep-2005 Less: 01-Sep-2005
10,000.00 9,136.44 Accrued Total
10% 9%
16 / 360 30 / 360
44.44 68.52 (44.44) 68.52
Accounting
The accounting for the contract is: Date Event Loan Principal 10,000.00 Lease Funding (10,000.00) 44.44 (908.00) (863.56) 908.00 908.00 (908.00) 31-Aug-2005 Actual 68.52 (68.52) (44.44) (44.44) 908.00 Receivables / Rec. Clearing Revenue Clearing Loan Interest Income Bank
15-Jul-2005 31-Jul-2005 1-Aug-2005 1-Aug-2005 15-Jul-2005
Booking Actual Accrual Receipt Daily Interest Billing
Page 44
Accrual 01-Sep-2005 01-Sep-2005 15-Sep-2005 Receipt Daily Interest Billing (833.23) (901.75) 901.75 901.75 (901.75) 30-Sep-2005 15-Oct-2005 Actual Accrual Billing 895.51 (895.51) 55.35 (55.35) (68.52) 901.75
Setups
Streams
Define stream types for the stream purposes: Actual Income Accrual Daily Interest Interest Daily Interest Principal Excess Interest Paid Excess Loan Payment Paid Excess Principal Paid Interest Income Interest Payment (Non Billable) Loan Payment (Billable) Principal Balance Principal Payment (Non Billable) Unscheduled Loan Payment Unscheduled Principal Payment

Interest Calculation Basis Fixed Revenue Recognition Method Actual
Update stream generation template for:
Page 45
Stream Purpose Actual Income Accrual Daily Interest Interest Daily Interest Principal Excess Interest Paid Excess Loan Payment Paid Excess Principal Paid Interest Income Interest Payment Loan Payment Principal Balance Principal Catchup Principal Payment Unscheduled Principal Payment
Stream Type Actual Income Accrual Daily Interest Interest Daily Interest Principal Excess Interest Paid Excess Loan Payment Paid Excess Principal Paid Interest Income Interest Payment Loan Payment Principal Balance Principal Catchup Principal Payment Unscheduled Principal Payment
Primary N
Primary Stream Type Rent
Pricing Name -
N N N N N N
Rent Rent Rent Rent Rent Rent
Single Lending Loan Accrual Lending Loans Interest Lending Loans Principal -
N N N N N
Rent Rent Rent Rent Rent
Rent

Update accounting template set for: Stream Type Stream Purpose Transaction Type Memo Formula
Page 46
Actual Income Accrual Daily Interest Interest Daily Interest Principal Excess Interest Paid Excess Loan Payment Paid Excess Principal Paid Loan Payment Unscheduled Loan Payment Unscheduled Principal Payment
Actual Income Accrual Daily Interest Interest Daily Interest Principal Excess Interest Paid Excess Loan Payment Paid Excess Principal Paid Loan Payment Unscheduled Loan Payment Unscheduled Principal Payment
Accrual
No
CONTRACT _ACTUAL _INCOME _ACCRUAL -
Billing Billing Billing Billing Billing Billing Billing Billing
No No No No No No No No
Financial Product
Interest Calculation Basis Fixed Revenue Recognition Method Actual Accrual Stream Actual Income Accrual
SAMPLE CONTRACT 5 Recalculate payments on interest rate change for a Lease
A lease contract may be configured with the following: Interest rate changes on payment due date only The payments for the balance term of the contract are recomputed when the interest rate changes The contract is rebooked with the revised payments Rent is billed based on the contract payment schedule Cash is applied to the rent invoices
Page 47
Revenue is recognized based on income streams generated on booking or rebooking
This contract is classified as: Interest Calculation Basis Reamort Revenue Recognition Method Streams
Contract Data
Sample contract data is: Field Contract Header Contract Name Description Customer Name Customer Number Contract Start Date Contract End Date Term (Months) Product Book Classification Tax Owner Interest Calculation Basis Revenue Recognition Basis Assets Item Asset Unit Cost Quantity Installed Site Payment Schedule Server 1 12,000 1 New York Lease Reamort Streams Lease Contract Reamort, Streams Mahali Holdings Inc 2078 01-Jan-2005 31-Dec-2005 12 Lease Reamort Streams Sales Type Lease Lessee Reamort Streams Value
Page 48
Contract Line Type Asset Payment Type (Stream) Advance / Arrears Frequency # of periods Amount Payment - Rates Effective From Index Name Base Rate Adder Rate Minimum Rate Maximum Rate Principal Basis Interest Basis Interest Start Date Days in a Month Days in a Year
Financial Asset Line 1 Rent Arrears Monthly 12 1,040
01-Jan-2005 Monthly Rate 5 1 1 10 Scheduled Simple 01-Jan-2005 30 360
Rate Change Frequency Rate Change Start Date Rate Change Value Billing Date 01-Jan-2005 0
Transactions
The following transactions have been performed on the contract: Date Transaction Verify
Page 49
01-Jan-2005 30-Jan-2005 01-Feb-2005 28-Feb-2005 1-Mar-2005
Booking Accrual Billing Accrual Billing
Streams, Accounting, Lease Center Accrual Report, Accounting Receivables, Accounting, Lease Center Accrual Report, Accounting Receivables, Accounting, Lease Center
Pricing
Yields
Payment and Accrual Streams

Date Rent (Billable) 30-Jan-2005 01-Feb-2005 28-Feb-2005 01-Mar-2005 30-Mar-2005 01-Apr-2005 30-Apr-2005 01-May-2005 30-May-2005 01-Jun-2005 1,040.00 1,040.00 49.28 1,040.00 55.27 1,040.00 61.23 1,040.00 67.15 Pre Tax Income (Accrual) 73.03
Page 50
30-Jun-2005 01-Jul-2005 30-Jul-2005 01-Aug-2005 30-Aug-2005 01-Sep-2005 30-Sep-2005 01-Oct-2005 30-Oct-2005 01-Nov-2005 30-Nov-2005 01-Dec-2005 30-Dec-2005 01-Jan-2006 1,040.00 1,040.00 1,040.00 1,040.00 1,040.00 1,040.00 1,040.00
43.25
37.18
31.08
24.94
18.76
12.54
6.29
The revised streams after the first reamort are: Date Rent (Billable) 30-Jan-2005 01-Feb-2005 28-Feb-2005 01-Mar-2005 30-Mar-2005 01-Apr-2005 30-Apr-2005 01-May-2005 30-May-2005 01-Jun-2005 30-Jun-2005 01-Jul-2005 1,032.79 1,032.79 35.43 1,032.79 40.39 1,032.79 45.33 1,032.79 50.24 1,032.79 55.12 Pre Tax Income (Accrual) 59.99
Page 51
30-Jul-2005 01-Aug-2005 30-Aug-2005 01-Sep-2005 30-Sep-2005 01-Oct-2005 30-Oct-2005 01-Nov-2005 30-Nov-2005 01-Dec-2005 30-Dec-2005 01-Jan-2006 1,032.79 1,032.79 1,032.79 1,032.79 1,032.79 1,032.79
30.44
25.43
20.40
15.33
10.25
5.13
Accounting
The accounting for the contract is: Date 01-Jan-2005 Event Booking Lease Funding (12,480.00) 480.00 30-Jan-2005 01-Feb-2005 Accrual Rebook 12,480.00 (406.97) 01-Feb-2005 Booking (12,393.48) 320.45 01-Feb-2005 01-Feb-2005 28-Feb-2005 Accrual Adjustment Billing Accrual (1,032.79) 55.12 12,393.48 (320.45) (13.04) 1,032.79 (55.12) 13.04 (12,480.00) 406.97 Unbilled Receivables 12,480.00 (480.00) 73.03 (73.03) Unearned Revenue Receivab les Lease Income
Setups
Streams
Page 52
Define stream types for the stream purposes: Rent Pre Tax Income

Interest Calculation Basis Reamort Revenue Recognition Method Streams
Update stream generation template for: Stream Purpose Rent Pre Tax Income Stream Type Rent Pre Tax Income Primary Y N Primary Stream Type Rent Pricing Name Rent Single Asset Income Accrual

Update accounting template set for: Stream Type Rent Pre Tax Income Stream Purpose Rent Pre Tax Income Transaction Type Billing Accrual Memo No No Formula -
Financial Product
Interest Calculation Basis Reamort Revenue Recognition Method Streams Accrual Stream Pre Tax Income
NAVIGATION
The navigation for the events in this document is:

Accounting
Navigation: Operations > Transactions View accounting
Page 53
Accruals
Applies to estimated and actual accrual Navigation: Requests -> Run Program: Generate Accruals Master Streams
Accrue streams defined on the contract and financial product Program: Generate Accruals Master Actual
Accrue the actual interest calculated and streams defined on the contract and financial product Program: Generate Accruals Master Estimated and Billed
Estimate income and billed interest View accrual report for details on accrual transactions
Billing
Navigation: Requests -> Run Program: Create Receivables Variable Rate Invoices - calculate variable rate amount to be billed
View report for details on variable rate processing Master Program Process Billable Streams select streams to be invoices Program Prepare Receivables Bills select billing transactions to be invoiced Master Program -- Receivables Bills Consolidation consolidate invoices Master Program -- Receivables Invoice Transfer transfer invoices to AR interface AR: Autoinvoice Master Program transfer invoices from AR interface to AR invoices Program: Fetch AR Invoice Numbers establish the link between bills in Oracle Lease Management with invoices in AR.
Booking
Navigation: Origination > Contracts > Contract Create contract Update parties Update terms and conditions Create assets Update payment schedule
Page 54
Update interest rate parameters Book contract
Early Termination
Navigation: Contract Management > Termination Quotes

Funding
Create termination quote Accept termination quote
Navigation: Origination > Funding > Funding Fund assets Fund revolving loans (borrower payment) Program Pay Invoice Prepare for AP Transfer selects approved disbursements and funding to create payables Program Pay Invoices Transfer to AP Invoice Interface updates the payables interface table AP: Payables Open Interface Import creates invoice in payables
Interest Index
Navigation: Setup > Receivables > Interest Rates Update interest rate parameters
Lease Center
Navigation: Requests -> Run Program: Loan Balances Update updates the loan balances displayed in lease center Navigation: Lease Center > Overview (balances button) View loan balances
Navigation: Lease Center > Structure View interest rate parameters
Navigation: Lease Center > Transactions View billing, disbursements and receipts
Navigation: Lease Center > Schedule (Payment Schedule) View streams
Navigation: Lease Center > Schedule (Variable Rate Statement)
Page 55
View interest rate applied
Navigation: Lease Center > Schedule (Principal Paydown Statement)

Paydown
View paydowns
Navigation: Lease Center > Requests Create principal paydown Create loan paydown
Period Reversal
Navigate: Requests > Run

Rebook
Program: Period Reversal reverses estimated income accrued
Navigation: Origination > Contracts > Revisions

Receipt
Update interest rate parameters
Navigate: Operations > Receipts > Batch Receipts Create receipt
Navigate: Requests > Run Program: Concurrent Cash Application applies cash using the cash application rules Program: Daily Interest Calculation determines the split between interest and principal for cash applied
Streams
Navigation: Operations > Streams View streams
Termination
Requests > Run Program: Terminate Expired Contracts
Navigation: Contract Management > Termination View contract termination status
Page 56
CONCLUSION
Many types of variable rate contracts may be configured and managed in Oracle Lease Management. This whitepaper provides an overview of the flexibility available in Oracle Lease Management. Users may review the user and implementation guide for Oracle Lease Management for a complete understanding of the features and functions.
Page 57
Variable Rate Contracts Oracle Lease Management February 2006 Author: Mukul Mittal Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA 94065 U.S.A. Worldwide Inquiries: Phone: +1.650.506.7000 Fax: +1.650.506.7200 oracle.com Copyright 2005, Oracle. All rights reserved. This document is provided for information purposes only and the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractual obligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without our prior written permission. Oracle, JD Edwards, and PeopleSoft, are registered trademarks of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners.

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Variable Rate Contracts Oracle Lease Management (OKL.