Entry Criteria:

To guide the User to run Amortization Process for a specific Month End

Process:
Activities Used in Profitmaxer while executing Amortization Process:

Amortization JV Account Setup

Amortization Process

Amortization JV Postings

Path for Activities:

WHC-WHC Set up-Amortization JV Account Setup (Master Data setup which is a one time setup)

WHC-WHC Setup-Amortization Process

Finance-Finance Postings-Amortization JV Postings

Navigation Steps for Activities:

Amortization JV Account Setup:

x Use the above path for the activity

x Select the desired Amortization Account from the lookup(list) of all accounts where the debit posting must hit GL postings
x Select the desired Accumulated Amortization Accorunt from the lookup(list) of all accounts where the credit must hit GL
postings
x Click on “Save” button to save the transaction
x Note: Since it is a Master Setup, it’s a one time set up activity. As and when the Amortization Process is run during the month,
will hit the GL as per the accounts setup in this activity
Amortization Process:

x Use the above mentioned path for the activity

x Select the desired “Month” and “Year” drop down for Amortization to run
x Click on “Process” button. Each WHC which will be given “RR date” and “Agreement End Date” in the “WHC Setup” would be
displayed in the grid below the button with amortization calculations being done for each

x After clicking on “Yes” button, all WHC’s would be displayed for which “RR Date” and “Agreement End date” info are given
x Click on “Create JV” button
x Following Screen
x Following Screen
x Following Screen
Amortization Journal Voucher Postings:

x Click on above mentioned path

 x Click On “View” button and “Post” button

Amortization Calculation Logic Followed in Profitmaxer:

Total Number of days: Agreement End Date-RR Date or Water Sale Date (whichever is earlier)

Lapsed Days: Previous Month End Date-RR Date or Water Sale Date (whichever is earlier)

Remaining Days: Total number of Days-Lapsed Days

Each Day Amount: Closing Balance/Remaining Days

Calculated Month (For which Process to be run) Amount: Each day amount*Number of days in calculated month

Example:

Amortization to run for month of October 2010 Month End with RR date as 27th June 2010 and Agreement End Date as 27th June 2018 for WHC
Achanta:

Total Number of days: Agreement End Date-RR Date (27th June 2018-27th June 2010)] = 2922 days

Lapsed Days: Previous Month End Date-RR Date (30th Sept 2010-27th June 2010) = 95 days
Remaining Days: Total number of days-Lapsed days (2922-95) = 2827 days

Closing Balance Calculation: Closing Balance(figure) of Achanta brought from Intangible Account of Achanta party till September 2010 month
end which includes Opening balance and any transactions done for the party till that month end

So, Assume Opening Balance for Achanta is 2425062.5 as on 1 April 2010,

Transactions done (Debited to Intangible Account of Achanta) during 18th Oct 2010 is 10000,

Transactions done (Debited to this Intangible Account of Achanta) during 20th Oct 2010 is 20000

Cumulative (Sum or Closing) Amount of Achanta as on October 2010 Month End is 2425062.5 Plus 10000 plus 20000 which equals 2455062.5

Each Day Amount: Closing Balance/Remaining Days=2455062.5/2827=26921.449

Highlights of Amortization Automation Process in Profitmaxer :

x All the WHC’s calculated Amortization amount would be summed up for desired month and passed on as JV in a single shot
x Awareness of any Finance back ground to calculate Amortization or Postings to desired accounts are not needed for the person who
handles “Amortization” activity
x It is hardly a 4 step Process which will give the result for all the WHC’s cal
x User is given flexibility to reprocess the Amortization before sending for creation of JV

Verification:
User must ensure the following Points before running Amortization Process:

x “RR Date” is updated in WHC Setup for desired WHC’s for which Amortization is to be run
 x “Agreement End Date” is updated in WHC Setup for desired WHC’s for which Amortization is to be run
x Amortization JV Account Setup is created as a one time setup
x Transcode must definitely set up for

Exit Criteria:
Amortization automation Process has been completed for a specific month end