Loan Origination Fee — Monthly EIR Amortization
Releasing a portion of the deferred origination fee as interest income each month.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Deferred Origination Fee (Contra-Asset) | Contra-Asset (−) | 166.67 | - |
| Interest Income (EIR Adjustment) | Revenue (+) | - | 166.67 |
💡 Accountant's Note
The origination fee amortizes over the loan's life using the EIR method — typically resulting in a slightly higher effective interest rate than the coupon rate. Monthly amortization increases interest income.
Practitioner & Systems Framework
💻 ERP Architecture
This posting is fully automated in SAP Bank Analyzer and Oracle FLEXCUBE through the end-of-month interest accrual batch. The amortization follows the EIR schedule generated at origination. Manual entry is only required if the batch fails or a loan is restructured mid-period.
⚠️ Audit Flags
Auditors reconcile the closing deferred fee balance to the origination amount minus cumulative amortization. Accelerated amortization on prepaid loans must be tested. If a loan is restructured, the EIR must be recalculated from the modification date.
📄 Required Documentation
System-generated EIR amortization schedule, month-end interest income ledger reconciliation, and restructuring memo (if applicable).
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.