N.Y. Comp. Codes R. & Regs. Tit. 9 §§ 1644-2.5

Current through Register Vol. 46, No. 53, December 31, 2024

Section 1644-2.5 - Premium on temporary loan notes

(a) Premiums received from purchasers of temporary loan notes issued by the local agency in amounts of less than $100 will be credited directly to the appropriate interest cost or expense account, the date of issue of the temporary loan notes being the determining factor as to whether the credit will be to development or operations. Thus, if the date of issue of the temporary loan notes is prior to the date of substantial completion, the premium thereon, if under $100, is credited, through the cash receipts register, directly to account 1420.1, Interest. Similarly, if the date of issue of the temporary loan notes is subsequent to the date of substantial completion, the premium thereon, if under $100, is credited, through the cash receipts register, directly to account 4716, Interest on Indebtedness.

(b) Where the premium received is in the amount of $100 or more, the premium should be set up as a deferred credit and amortized pro rata over the life of the temporary loan note to the appropriate interest cost or expense account. The write-offs should be made by journal voucher at the end of each calendar quarter. The entries should be recorded, as follows:

(1) Premium deposited in project's bank account. The accounting entries are as follows:

Entry (1): Through cash receipts register at time cash is received:

Dr. Account 1111--Development Fund or

Dr. Account 1112--Administration Fund

Cr. Account 2230--Premium on Temporary Loan Notes

Note:Entry (1) records the receipt of the premium in cash.

Entry (2): Through journal voucher for the quarterly pro rata write-off:

Dr. Account 2230--Premium on Temporary Loan Notes

Cr. Account 1420.1--Interest or

Cr. Account 4716--Interest on Indebtedness

Note:Entry (2) credits the appropriate interest cost or expense account with a pro rata portion of the premium applicable to the period.

(2) Premium retained by the escrow agent. The accounting entries are as follows:

Entry (1): Through the journal voucher at the time the funds are re-

ceived by the escrow agent, who retains the premium and invests the funds so that they are available to pay interest at the date of maturity of the temporary loan notes:

Dr. Account 1115--Special Deposits