Death-turn write-off runs before recovery; full principal charged off (Closes #123)

Winnie commented

2026-10-01 15:44:43 +00:00

Owner

The recovery slice was recognized before the write-off in the turn a loan died, so the charge-off covered Remaining − RecoveryRate × Remaining instead of the full principal, and the first recovery slice was counted as income AND shrank the write-off. Total credit losses were understated by RecoveryRate × Remaining per defaulted loan, equity overstated by the same amount. Now the full unprovided principal is charged off first (per #78), then the recovery stream reverses the allowance as cash comes in — the recognized loss equals the economic loss exactly.

The shipped writeoff test encoded the old numbers; its death-turn assertion now pins the full 10000 write-off with 1000 recovery income in the same turn. Full suite + vet clean.

The recovery slice was recognized before the write-off in the turn a loan died, so the charge-off covered Remaining − RecoveryRate × Remaining instead of the full principal, and the first recovery slice was counted as income AND shrank the write-off. Total credit losses were understated by RecoveryRate × Remaining per defaulted loan, equity overstated by the same amount. Now the full unprovided principal is charged off first (per #78), then the recovery stream reverses the allowance as cash comes in — the recognized loss equals the economic loss exactly. The shipped writeoff test encoded the old numbers; its death-turn assertion now pins the full 10000 write-off with 1000 recovery income in the same turn. Full suite + vet clean.

Winnie added 1 commit

2026-10-01 15:44:43 +00:00

death-turn write-off runs before recovery; full principal charged off (Closes #123 )

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The recovery slice was recognized before the write-off in the turn a
loan died, so the charge-off covered Remaining - RecoveryRate x
Remaining instead of the full principal, and the first recovery slice
was counted as income AND shrank the write-off. Total credit losses
were understated by RecoveryRate x Remaining per defaulted loan and
equity overstated by the same amount. Now the full unprovided
principal is charged off first (per #78), then the recovery stream
reverses the allowance as cash comes in - the recognized loss equals
the economic loss exactly.

The shipped writeoff test encoded the old numbers; its death-turn
assertion now pins the full 10000 write-off with 1000 recovery income
the same turn.