For a Debit Interest Product “DRIN” with monthly liquidation, the “Back-valued recalc” check box is
selected. A rate “RATE01”, used in the interest calculation, is maintained as follows:
Eff Date Rate%
l-Jan-08 4
l-Feb-08 4.1
If today’s date is 18-Feb-08 and the rate against l-Jan-08 is modified to 4.05, then what does the
system do?
A.
The system applies 4.1 for the current liquidation cycle but does not recalculate for the previous
liquidation cycle.
B.
The system applies 4.1 for the current liquidation cycle, recalculates the previous liquidation
cycle at 4.05, and makes correction entries.
C.
The system applies 4.05 for the current liquidation cycle but does not recalculate for the
previous liquidation cycle.
D.
The system applies 4.05 for the current liquidation cycle, recalculates the previous liquidation
cycle at 4.05, and makes correction entries.
Explanation:
Explanation/Reference:
The only reason system will recalculate past liquidation and make adjustment entries is because
the button ‘Back-value recalc’ is chaecked.