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Amortization of the Purchase Price

The purchase price amortization is defined by the amortization vector. This vector contains some fraction of the total pruchase price that will amortize each month. You can use any method as long as the total percentage in the vector adds up to one!

If you want to write off the entire purchase price then put a "one" in the first month.

FASB If you select the FASB method then the number of months of postitive cash flow are computeed and the fraction of the total amortization is determined by dividing each month by the total cash flow for this positive cash flow period.

Other methods There is a wide range of methods used to amortize portfolios. LLAMA does notr attempt to provide you with these calculations. You can create and of the non-cash flow methods directly with your spreadsheet or calculator. There are nor rules and you can set the excat amoutn for each month of the valuation.

Conversion Cost

This cost is assumed to be the capitalizable portion of the conversion expense. The number is considered as a part of the purchase price and is recognized as amortization.

The total purchase price of the portfolio is the money paid to the seller and the conversion cost incurred.

The conversion cost is only shown in the amortization section of the income statement. Is is a non-cash expense.

lfccnv Single dollar amount

This value can be either on the [DA] record or the [ES] record. lfcnv Conversion cost amortization vector

This vector is on the [ES] record. The total for all rows in the vector must add up to one. The program will not check your data.!
Net Income The statement
Plus: Revenues
Less: Costs
Less: Foreclosure losses
Less: Interest Expenses
Less: Amortization purchase price
Less: Amortization conversion costs

Equal: Net pretax income
Less: Income Tax
Equal: Net income

Plus: Amortization
Equal: Cash flow

The Calculations

LLINC8=(LLFEE +LLFEE1 +LLFEED )
LLANC8=(LLLFEP +LLLFEE +LLANC+LLANC1+LLANC2 )
LLERN8=(LLEPI +LLEPO +LLETI )
LLEXP8=(LLCST +LLCNV +LLCDEL +LLCLAT )
LLFOR8=(LLFCC +LLFLSH +LLFLPI+LLFLTI+LLFLSV+LLFLSI+LLFLSP)
LLADV8=(LLADVI +LLADVP)
LLNET =(LLINC8+LLANC8+LLERN8-LLEXP8-LLIOE-LLADV8-LLFOR8-LLINL)

Income Tax LLTAX =(LLNET* LFRTX )
LLNET1=(LLNET- LLTAX )
LYCSHD=(LLNET1 * LFRAT1 )
LYBEFC=(LFRATF * LFRTX * LFVAM)
Cash Flow