Basic Customizing for Stock Investments – Part 2

This is the first part is available here

Assign Update Types for Valuation

FSCM-TRM-TM-General Settings-Accounting-Key Date Valuation-Update Types-Assign Update Types for Valuation

Derived Business Transactions Update Types and Usages

FSCM-TRM-TM-General Settings-Accounting-Derived Business Transactions-Update Types-Define Update Types and Assign Usages

Assigned Update Types for Derived Business Transactions

FSCM-TRM-TM-General Settings-Accounting-Derived Business Transactions-Assigned Update Types for Derived Business Transactions

Define Account Assignment References

FSCM-TRM-TM-General Settings-Accounting-Link to Other Accounting Components-Define Account Assignment References

Because we have a difference in accounting treatment for the price gains between our 2 security classifications, we need 2 account assignment references.

Define Account Assignment Reference Determination

FSCM-TRM-TM-General Settings-Accounting-Link to Other Accounting Components-Define Account Assignment Reference Determination (Securities/Listed Derivatives)

Indicate Update Types as Relevant to Posting

FSCM-TRM-TM-General Settings-Accounting-Link to Other Accounting Components-Indicate Update Types as Relevant to Posting

All of the update types created should be made relevant to posting except for DBN_E001 and DBN_E002 which TRM uses internally when calculating gains and losses.

Define Account Determination

FSCM-TRM-TM-General Settings-Accounting-Link to Other Accounting Components-Define Account Determination

Account Symbols

Posting Specifications

Assignment of Update Types to Posting Specs

Assignment of GL account to Account Symbol

Trying it out

For our demonstration, we will use IBM as the issuer and Bank of Montreal as our counterparty and depository bank. Use transaction code BP to enable them in these roles with your company code. The next step is to create a security account. Use transaction TRS_SEC_ACC to create the account.

We also need to create the security we will be trading using FWZZ

At this point, we are ready to enter our first transaction in FTR_CREATE. In the initial screen, we have to specify our company code (1001), transaction type (100-purchase), our counterparty (BMO) and the ID number (IBM_CS).

It is possible to add the commission (expensed or capitalized) directly in the deal by using the “other flows” tab. After saving the deal, we have to settle it in FTR_EDIT as the processing category we selected requires settlement. Once the deal is settled, use TBB1 to post the purchase transaction. Let’s add a manual fee with FWBS.

To be able to fair value our position at month end, we need a closing price. You can use FW17 to enter a price for the security class. Remember that our valuation step requires a closing price. Because we did not configure reset flows for valuation, we need to use the “Mid-Year Valuation with Reset” option in TPM1. Next, let’s pretend IBM declares a dividend of 25 cents per share. We first need to enter a dividend condition on the security class using FWZZ.

Let’s also pretend that we participate in IBM’s DRIP but that they don’t support fractional share ownership. In order to capitalize the dividend, we have to use FWZE and enter the amount and number of shares to capitalize.

Whatever amount is left (3$ in our example) will be expected in the bank sub account. The next business process we will cover is Corporate Actions. Let’s assume IBM announces a 2 for 1 split effective Feb 12th. We must first enter the action using FWK0. We must also activate the action before we can post.

To make the split effective in the sub-ledger, we must post it with FWKB. If you look at our position in TPM12 after posting, the number of units has doubled but the purchase value has not changed.

To finalize this example, let’s sell all of our shares for a big profit. Once the deal is settled and posted with TBB1, we end up with the following entries in the posting journal (TPM20)

Thanks for reading. I hope you have enjoyed this post and that you learned a thing or two in the process.