IDC amortization (as performed by SuperTRUMP) does not work like any other kind of income amortization. It works like this:
1) Compute book income for the transaction with all fees, allocating it according to accounting rules.
2) Compute book income for the same transaction, but without any IDC fees.
3) Subtract the two income streams thus computed. The difference is the income contribution from the IDC fees. This difference might be negative during some periods, but the total of the differences in each period will match the total amount of the IDC fees.
4) Based on the stream of differences from step three, we divide the stream by its total, so we get a dated pattern of "IDC allocation factors" whose total is one.
5) We use the IDC allocation factors to spread each IDC fee over time.
So IDC fee spreading can have a very strange pattern and does not necessarily resemble any other income pattern from the transaction.
This method corresponds with what is described in Equipment Leasing by Amembal, Halladay & Isom (McGraw-Hill, 1992), pages 444-445.
