In addition to the standard business rules for endowment transactions, the following business rules apply to liability decrease transactions:
• When you initiate the e-doc, you must select a Transaction Sub-Type (‘Cash’ or ‘Non-cash’).
• You must select or enter a valid, active security. Only one security record may be inserted in each transaction.
• The security specified must have a liability class code.
• After you enter a security, the system displays the associated security name, class code, class code description, security transaction code and description, and tax lot indicator.
• You must enter a valid, active registration code.
• You must enter a number greater than zero for the transaction units in the transaction line.
• When a transaction line is added, the transaction amount must equal units/shares because liabilities are priced at $1 per unit.
• The tax lot indicator for the security is ‘No’. Consequently, for each transaction line added, the system adds a record to the Holding Lot table and shows the data in the Tax Lot Lines tab. This stored data includes:
o The line number from the transaction line on the e-doc.
o The holding lot number set at 1.
o The number of units from the security tax lots calculation times negative 1 (-1).
o The holding cost from the transaction amount.
o Acquired date.
• The system verifies that the tax lot referenced in each tax lot line has sufficient units and value to complete the transaction. (Keep in mind that liability units are represented by a positive number while liability value is always displayed as a negative amount. Therefore, 100 liability units = -$100 liability balance or value.)
• The Etran code for the security must have an appropriately identified General Ledger object code record—one that matches the chart for the KEMID-associated General Ledger account in the transaction line.
o For an income transaction, the chart must match the chart of the active KEMID-GL Link record for income.
o For a principal transaction, the chart must match the chart of the active KEMID-GL Link record for Principal.
• When you submit a reversing transaction, the system verifies that the tax lot referenced in each tax lot line has sufficient units and value to complete the transaction. A liability cannot have a carry value (holding cost) greater than zero or units less than zero.
• When you initiate a reversing transaction (via the error correction button), the system generates a new e-doc using all of the information in the original e-doc with all signs reversed for units and amounts.
• If the Transaction Sub-Type is ‘Cash,’ you cannot enter an Etran code in the transaction line.
• If the Transaction Sub-Type is ‘Non-cash,’ you must enter an Etran code in the transaction line. The Etran code in the transaction line must have an Etran Type Code of ‘I’ (Income) or ‘E’ (Expense).