Booking bonds movements

The transactions for bond trades introduce some new concepts as the nominal value or interest, this is because it is a different type of asset, but as for the Shares the focus of the transactions structure is on the accounting value of the asset.

• In the Debit column enter the account of the bond.
• In the quantity column enter the nominal value of the bond, and in the unit price enter the current price of the bond. The resulting amount is the purchase value of the bond.
• Bank charges
  • The debit column indicates the account to record the bank charges due to the processing of the purchase, and indicates the amount due to the bank.
• Pro-rata Interests
  • Since some time has certainly gone since the maturity of the last coupon, the interest accrued since the last maturity must be paid at the time of purchase. This leads to a decrease in the securities income account.
  • It is useful to indicate in the description the period taken into account for the payment of interest as well as the interest rate.
• Payment of Bonds
  • The sum of the purchase, bank charges and the interests, which can be paid for example with the bank account.

Collection of interest coupons

This operation normally takes place once or twice a year (the dates on which the coupons fall due are indicated on the coupons). At each maturity date, the full amount of interest accrued during the period indicated on the coupon must be recorded.

1. Net interest
   • The net amount collected, through a bank for example. The value is net of withholding tax. Record the income in the debit column.
2. Recovery of Withholding Tax
   • Amount due as withholding tax, in Switzerland it represents 35% of the interest earned.
   • It is useful to use a special account to record the value of this amount, as usual the amount is repaid in full or at least in part it is accounted for as a credit increase.
3. Total Interest
   • Total gross interest, to be accounted for as securities income.

Sale of bonds

1. Total Sale
   • In the Credit column enter the account of the security you are selling.
   • In the quantity column, enter the nominal value of the bond you are selling, putting a minus before the amount.
   • Enter the current rate of the bond.
   • This operation allows you to update the book value of your bonds by accounting for the total effective value of the security.
2. Bank Charges
   • The Debit column still records bank charges, as during the purchase.
3. Accrued Interest
   • In the Credit column indicate the income from securities.
   • The interest accrued from the payment of the last coupon to the current date of sale is calculated. The seller of the bond is entitled to receive interests for that period.
4. Cashed Net
   • In Debit column enter the collection of the net amount.
   • The net value received is found by subtracting bank charges from the total value and adding accrued interest.
5. Result on Sale
   • The result of the sale is calculated by subtracting the value of the bond at the current price with the value the bonds had at the time of purchase. The price is always applied to the nominal value.
   • If there is a gain on the sale, enter the security account in debit and a securities income account in credit. If a loss occurs, enter a loss on sale account in debit and a security account in credit.
   • As with Shares, you can also use the Calculate sales Data extension for bonds to automatically calculate this value. On the same row, the extension records the sale quantity as a neutral number. This allows it to determine the unit result of the sale and display the gain or loss for each individual security.
6. Exchange rate profit or loss (only in multi-currency accounts)
   • The exchange difference is calculated by comparing the accounting exchange rate with the current exchange rate.
   • The accounting exchange rate is already calculated automatically by the extension, otherwise you can find it by opening the security account tab and comparing the balance in the security's currency with the balance in the base currency.
   • In the Debit column in the case of an exchange rate profit enter the security account, in the case of a loss enter a cost account for the exchange rate loss.
   • In the Credit column, in the case of an exchange rate profit, enter a revenue account for the exchange rate profit, in the case of a loss enter the security account in order to decrease its value.

Withholding tax (35%)

Withholding tax in Switzerland is a levy on capital gains, lottery winnings, life annuities, pensions and insurance benefits.

Nominal value

Is the portion of the debt shown on the bond on which interest is calculated.

Interests

It is expressed as a percentage and represents the amount of interest that the coupon holder receives at regular intervals, usually annually. Interest is always calculated on the basis of the Nominal value.