Hi team,
> > I’ve reviewed the accounting entries for the Buy-Down Fee feature > (FINERACT-2311 https://issues.apache.org/jira/browse/FINERACT-2311 ) and > would like to suggest the following corrections to align with standard > accounting practices: > > --- > > 1. *At Disbursement* > > *Current*: > DR: BuyDown Expense (Expense) > CR: Deferred Income (Liability) > > *Suggested*: > DR: Cash or applicable Asset Account (Asset) > CR: Deferred Income (Liability) > > *Reason*: The buy-down fee is received by the institution. If collected > upfront, it should be recorded in Cash. If collected later, it should be > posted to a Receivable or net-off account. > > --- > > 2. *At Loan Charge-Off* > > *Suggested*: > DR: Deferred Income (Liability) > CR: Buy-Down Fee Reversal (Income) > > *Reason*: Any unearned portion of the buy-down fee should be reversed > when the loan is charged off to avoid recognizing future income. > > --- > > 3. *Adjustment to Buy-Down Fee* > > *Suggested*: > DR: Deferred Income (Liability) > CR: Cash or applicable Asset Account (Asset) > > *Reason*: If the fee amount is corrected after disbursement (e.g., due to > a merchant dispute), the adjustment should reverse part of the original > asset entry, not affect income. > > --- > > These changes will help ensure accuracy in accounting and consistency with > how the buy-down fee is operationally collected and tracked. > > Happy to connect and provide further clarification on these accounting > entries if needed. > > > Regards, > Ashok >
