International Finance and Accounting Handbook

21 • 28

D. Servicing Asset

Fair Value of Servicing

Contractual

Adequate

Interest at

Year Ending December 31,

Cash Receipt (1)

Compensation (1)

Net (1)

10% Discount

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__________________

_______________

_____________

_____________

25.00

20X1

$

20.00

$

10.00

$

10.00

17.50

20X2

16.49

8.25

8.25

11.00

20X3

12.72

6.36

6.36

5.74

20X4

8.68

4.34

4.34

1.98

20X5

4.35

2.17

2.17

—

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_____________

$

62.24

$

31.12

$

31.12

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_____________

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(1) Applied to the outstanding principal asset balance.

VI. Gain on sale (Pre-Tax)

A. Basis Allocation

Market Value

% Market Value

Allocated Basis

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_______________

_____________

Sold senior interest

$

900.00

80.82%

$

808.18

Retained interests:

Subordinate interest

$188.62

16.94%

169.38

Servicing

25.00

2.24%

22.45

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_____________

213.62

19.18%

191.82

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_____________

$

1,113.62

100.00%

$

1,000.00

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_____________

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B. Pre-Tax Gain (Loss)

Sales proceeds

$

900.00

Basis allocated to senior interest

(808.18)

Transaction expenses

(5.00)

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Pre-tax income

$

86.82

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C. Accretable Yield on Subordinated Interest

Estimated cash flows (undiscounted) $ 278.74Allocated basis

169.38

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Accretable yield

$ 109.37 ____________________________________