Amortization of Bond Premium/Discount

[Ken M]

I have been using an older personal version of Fund Manager for a number of years and am getting ready to upgrade. I'm interested in whether amortization of bond premium/discount has been added (either calculated amortization only or as an adjustment to cost and interest income).

I saw an old post on amortizing bond premium/discount but it didn't appear Fund Manager supported it at that time. I can't tell if this feature was ever added. I see the professional version has some additional bond features but can't tell from the site what it is. Could you fill me in or point me to where it's explained on the site? Thanks.

[Mark]

Hi Ken M,

Yes, the 10.x Professional and Advisor versions support calculating and recording bond accretion and amortization. You can see this feature's line item in the version comparison table:

http://www.fundmanagersoftware.com/versions.html

You can read the documentation on this feature here:

http://www.fundmanagersoftware.com/help ... etion.html

[Ken M]

Mark-

I have downloaded a trial copy of the professional version and have pulled some bond transactions into it. I read the Bond Accretion & Amortization information from the link which your provided in response to my prior post but I still can't determine:

1) How to tell Fund Manager to calculate the accretion & amortization.
2) How to pull the accretion/amortization into a report so that we can see the current month or cumulative amortization since purchase.

From reading through the information, I believe that a user defined distribution field is needed so that we can put it in a report. I'm not sure how this is done. I did not find a standard report in Fund Manager which provides this information.

A little additional information to let you know what we're trying to do is: Our accrual basis company buys a $100,000 above market rate bond for $102,000 and we need to amortize the $2,000 premium over the remaining life of the bond to interest income. Fund Manager does that by offsetting distributions with one adjusting the tax basis ($102,000 cost). At maturity, the $102,000 cost would be brought back to $100,000 face amount. We need to report on this so we can adjust the company's books for the calculation performed by Fund Manager.

Let me know if this is already in the program and where to find it. Thanks. Ken

[Mark]

Hi Ken,

1) In the Portfolio Editor window, find your bond investment, right mouse click on it, and choose "Investment Data / Accretion/Amortization". Since you purchased your bond at a premium, select "Amortization", select a date you want to record the amortization for, and choose "Calculate...". Based on your recorded "Investment Properties... / Income" settings, FM will show you the YTM it will use for the calculation, and the amortization amount for the selected date range. Press OK, and the amount will be filled back in on the prior dialog. Press OK to record the amortization.

2) Amortization is recorded as 2 distributions. It will be a negative "Amortization" type of distribution, and a positive "Return of Capital" type of distribution, for the same amount. You can report on these in several different reports, like the "Distribution Summary", or the "Custom" reports.