Adjustment Item Earnings Method

Adjustment Item Earnings Method

Adjustment Item Earnings Method tells the system how to calculate earnings on Contract Items (such as IDC and the Loan item for loans).  It defaults to "Customer" but there are 3 choices, all explained below.  All three are applicable to Leases but only Customer and Effective are applicable to Loans.  Adjustment Item Earnings Method can be found within the Pricing Setup for your Finance Products.

            This field is found in the following location:  Administration > Pricing > Finance Product, within the Computation Setup section


It will only affect the earnings on contract items listed within the Financing and Adjustment screen  (NOT equipment on leases).  Once this is set at the finance product level and a contract has been booked to that finance product the field can not be changed within the finance product BUT it can be altered within the contract main screen for a contract by contract basis. 


·         Customer Method

o    Earnings up to the date of the modification will stay the same, but upon the date of the modification the earnings will recalculate going forward. 

·         Effective Method

o    Upon a Modification that does not involve a rate change, the system will treat it as it does the Customer option:  Recalculate going forward.

o    Upon a Modification that DOES involve a rate change, the system will recalculate the contract item going back to the beginning of the contract and an adjusting entry will be made.

·         Fixed-Effective Method

o    Earnings will never recalculate

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