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Term Deposit – Reinvestment

There are some special considerations when you reinvest the principal and interest received on a Term Deposit Rollover. You will need to:

  • Record the interest income from the Term Deposit
  • Dispose of the term deposit (via Asset disposal)
  • Create a new reinvested Term deposit (via Add an Asset)
Step 1: Record the interest income from the term deposit

You will first process a receipt of interest income in the usual manner, but adding it to a bank account (even if the interest was not deposited into that account).

  • Select the INCOME tab and then select Add New Income.
  • Select the Account – either Fund or a specific member account if the Term Deposit is a segregated Asset. (This should be the same account that owns the Term Deposit.)
  • Under Add Income, the Select Asset field displays.
  • Select the relevant Term Deposit.
  • The income type can only be Interest. (Note: You CANNOT select reinvest.)
  • You will need to select a Bank Account even if the reinvested term deposit is not deposited into that account.
  • Enter the date the interest was paid.
  • Enter the amount of interest received.
  • Enter a Description like “TD interest dated 1 December 2020”.
  • Select SAVE INCOME.

 

Step 2: Dispose of Term deposit (that is to be reinvested)

You will need to record a disposal of the term deposit (which is going to be reinvested).

  • Select the ASSETS tab, then select ASSET DISPOSAL. The Asset Disposal screen will display.
  • Select the Account – either Fund or a specific member account if the Term Deposit is a Segregated Asset. (This should be the same account that owns the Term Deposit.)
  • The Asset Selection field displays.
  • Select the relevant Term Deposit.
  • The Dispose of Fixed Interest Asset should appear with details of the Purchase Date, Maturity Date, and Balance.
  • Enter the Disposal Date – which should be the maturity date unless the term deposit was terminated early.
  • You will need to select a Bank Account (even if the reinvested term deposit is not deposited into that account).
  • Select DISPOSE OF ASSET. Select OK when asked to confirm disposal.
  • Your list of assets should display and the term deposit will no longer be displayed.

 

Step 3: Create NEW Term deposit (that is to be reinvested)

You will now need to create a new term deposit (reinvested term deposit).

  • If you are at the ASSETS page, select ADD NEW ASSET. If you are not, then select the ASSETS tab, then select Add Asset. The Add New Asset screen will display.
  • Select the Account – either Fund or a specific member account if the Term Deposit is a segregated Asset. (This should be the same account that owns the Term Deposit.)
  • The Asset Class field displays. Select Fixed Interest. This should be identical to the Class and Category of the disposed asset.
  • Enter an asset name for the Term deposit at Asset Name.
  • Enter the other details, such as Purchase Date, Maturity Date, Balance (principal and interest to be reinvested), and Interest Rate.
  • Select the From Account. This should be the same account as the account you used above to record the term deposit interest and the disposed term deposit.
  • Select SAVE ASSET. The list of assets will appear.

Note:

  • If reinvesting principal only, the amount reinvested will be the amount originally invested – i.e. the amount you entered as the disposal proceeds.
  • If reinvesting both principal and interest, the amount reinvested will be the total of the original bond/term deposit (the disposal proceeds) PLUS the interest received.
  • Your Bank Account balance should now have returned to the balance shown prior to the entry of the interest income and your Assets list should show the new term deposit or bond at the total rolled-over value.