International Finance and Accounting Handbook

21 • 29

D. Subordinated Interest Amortization (according to EITF 99-20)

Fair Value

of Subordinate

Accretion at

Interest at

Unrealized

Year Ending December 31,

Beginning Basis

23.92% (2)

Cash Receipts

Ending Basis

18%

Gain/(Loss)

_______________________

__________________

_______________

_____________

_____________

_______________

_______________

(A)

(B)

(C)

(A) + (B) – (C)

$

188.62

19.24

20X1

$

169.38

$

40.51

$

80.34

$

129.54

142.23

12.69

20X2

129.54

30.98

70.47

90.05

97.36

7.31

20X3

90.05

21.54

59.84

51.75

55.05

3.30

20X4

51.75

12.38

47.54

16.59

17.42

0.83

20X5

16.59

3.97

20.55

(0.00)

—

—

_______________

_____________

$

109.37

$

278.74

_______________

_____________

_______________

_____________

(2) Yield that results in present value of subordinate cash flow equal to allocated basis.

If assumptions change during transaction, the yield on the subordinate interest would be adjusted in accordance with EITF 99-20

.

E. Servicing Interest Amortization (according to EITF 99-20)

Contractual

Year Ending December 31,

Beginning Basis

Cash Receipt

Amortization (3)

Ending Basis

_______________________

__________________

_______________

______________ _____________

(A)

(B)

(A) – (B)

20X1

$

22.45

20.00

7.21

$

15.23

20X2

15.23

16.49

5.95

9.29

20X3

9.29

12.72

4.59

4.70

20X4

4.70

8.68

3.13

1.57

20X5

1.57

4.35

1.57

(0.00)

_______________

_____________

$

62.24

$

22.45

_______________

_____________

_______________

_____________

(3) In proportion to the estimated servicing income (i.e. $7.21 = 20/62.24 * 22.45)

Appendix A.

(Continued

)