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The FNPC ledger accounts were adjusted at least annually to
reflect the portions of the deferred costs (which costs were
determined pursuant to SFAS 91) and deferred fees that had been
recognized as components of interest income in computing net
income for financial reporting purposes. The FNPC ledger
accounts were titled: Commercial loans--deferred fees/costs;
Installment loans--deferred fees/costs; and Mortgage loans--
deferred fees/costs. The balances in a particular FNPC ledger
account at the end of a given period reflected the cumulative net
amount that had been deferred but had not been recognized for
financial reporting purposes by FNPC as a component of interest
income under SFAS 91. Current balances in the FNPC ledger
accounts did not separately break out the amount of such fees,
costs, and adjustments to yield entered in those accounts. A
change in the balance of an FNPC ledger account from the end of
one year to the end of the next year reflected the net fees and
costs deferred by FNPC in calculating its net income for
financial reporting purposes under SFAS 91.
The Schedules M-1, Reconciliation of Income per Books With
Income per Return, filed with FNPC's Forms 1120 for the periods
in question, reflect that the net costs and fees recorded in the
FNPC ledger accounts were deferred and amortized pursuant to SFAS
91 for financial accounting purposes, and that the net costs and
fees were currently deducted as expenses or reported as income
for Federal income tax purposes.
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