Statutes, codes, and regulations
New York Codes, Rules and Regulations
Title 9 - EXECUTIVE DEPARTMENTSubtitle S - Division of Housing and Community RenewalChapter III - Low Rent HousingSubchapter D - Accounting Manual For Public Housing AgenciesPart 1645 - Investments
Subpart 1645-2 - Accounting For Investments
Section 1645-2.2 - Acquisition of investments

N.Y. Comp. Codes R. & Regs. tit. 9 § 1645-2.2

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Current through Register Vol. 46, No. 25, June 18, 2024
Section 1645-2.2 - Acquisition of investments
(a) The making of an investment of funds in the custody of a local agency should be authorized by resolution of the local agency. No investment shall, however, be made without the prior approval of the division.
(b) The accounting treatment of the elements involved in the acquisition of investments is as follows:

Element

Accounting treatment

Purchase priceCharge to the appropriate account in the 1170, Investments, group of asset accounts.
Premium or discountDo not set up on acquisition, but amortize over holding period as described in section 1645-2.3.
Accrued interest purchasedCharge to account 1144, Accrued Interest Receivable on Investments.
Expenses of acquisitionCharge directly to the same account that the interest earned on the investment will be credited to. See section 1645-2.4.

(c) The purchase price of the investment means the actual price paid by the local agency on acquisition, exclusive of accrued interest purchased or expenses of acquisition, such as brokers commissions, postage, registry and insurance fees, etc., if any. The premium or discount is the difference between the purchase price and the face value of the investment. With respect to the expenses of acquisition, many banks will handle the purchase of U.S. government securities without charging brokerage commissions. The division will be glad to advise local agencies experiencing difficulty in this respect. There may, however, be a charge, in the case of upstate local agencies, to cover the out-of-pocket expenses for telephone, postage, insurance and registry fees for mailing the securities from New York. All the information required to reflect the acquisition of investments on the books will appear on the statement furnished by the bank or broker handling the transaction. Prices of bonds are either quoted on a yield basis, or on the basis of so much per $1,000 face value, but the statement should also show the purchase price in dollars. The accounting treatment of the acquisition of investments is illustrated in the following example. Assume that on June 6, 1948 a local agency bought, through a bank, $1,648,000 face value of one-year one and one-quarter per cent U.S. Certificates of Indebtedness, issued June 1, 1948, to yield 1.21 per cent. The investment was made for the development fund and the bank's statement of the transaction shows that the accrued interest purchased from the date of issue to the date of purchase, is $282.19 and that the purchase price, based on the 1.21 per cent yield, was $1,648,692.47. The bank made a charge of $32.85 for postage. The entry recording this transaction would be made through the cash disbursements-voucher register, as follows:

Entry (1):

Debit: Account 1172, Development

Fund Investments

$1,648,692.47 .......................................................................................................

Debit: Account 1144, Accrued Interest

Receivable on Investments

$

282.19

Debit: Account 1420.1, Interest Expense

$

32.85

Credit: Account 1111, Development Fund

$1,649,007.51 ........................................................................

N.Y. Comp. Codes R. & Regs. Tit. 9 § 1645-2.2

The same entry would be made if the above transaction represented a direct application by bank of the proceeds of a temporary loan note issue (see Part 1643, Financing).