FINERACT-2232: Capitalized income - amortization in case of Charge-off event

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/data/loanproduct/DefaultLoanProduct.java

@@ -124,6 +124,7 @@ public enum DefaultLoanProduct implements LoanProduct {
     LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_INTEREST_RECALC_DAILY_CAPITALIZED_INCOME, //
     LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_INTEREST_RECALC_DAILY_CAPITALIZED_INCOME_FEE, //
     LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_INTEREST_RECALC_DAILY_MULTIDISBURSAL_CAPITALIZED_INCOME, //
+    LP2_ADV_PYMNT_ZERO_INTEREST_CHARGE_OFF_DELINQUENT_REASON_INTEREST_RECALC_CAPITALIZED_INCOME, //
     ;
 
     @Override

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/factory/LoanProductsRequestFactory.java

@@ -1628,4 +1628,15 @@ public class LoanProductsRequestFactory {
                 .incomeFromCapitalizationAccountId(accountTypeResolver.resolve(DefaultAccountType.INTEREST_INCOME));//
     }
 
+    public PostLoanProductsRequest defaultLoanProductsRequestLP2ChargeOffReasonToExpenseAccountMappingsWithCapitalizedIncome() {
+        return defaultLoanProductsRequestLP2ChargeOffReasonToExpenseAccountMappings()//
+                .enableIncomeCapitalization(true)//
+                .enableAutoRepaymentForDownPayment(false)//
+                .capitalizedIncomeStrategy(PostLoanProductsRequest.CapitalizedIncomeStrategyEnum.EQUAL_AMORTIZATION)//
+                .capitalizedIncomeCalculationType(PostLoanProductsRequest.CapitalizedIncomeCalculationTypeEnum.FLAT)//
+                .capitalizedIncomeType(PostLoanProductsRequest.CapitalizedIncomeTypeEnum.INTEREST)//
+                .deferredIncomeLiabilityAccountId(accountTypeResolver.resolve(DefaultAccountType.DEFERRED_CAPITALIZED_INCOME))//
+                .incomeFromCapitalizationAccountId(accountTypeResolver.resolve(DefaultAccountType.INTEREST_INCOME));//
+    }
+
 }

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/helper/ErrorMessageHelper.java

@@ -521,6 +521,13 @@ public final class ErrorMessageHelper {
                 resourceId, line, actual, expected);
     }
 
+    public static String wrongValueInLineInJournalEntry(String resourceId, int line, List<List<String>> actualList, List<String> expected) {
+        String actual = actualList.stream().map(Object::toString).collect(Collectors.joining(System.lineSeparator()));
+        return String.format("%nWrong value in Journal entries of resource %s line %s." //
+                + "%nActual values for the possible transactions in line (with the same date) are: %n%s %nExpected values in line: %n%s",
+                resourceId, line, actual, expected);
+    }
+
     public static String wrongDataInJournalEntriesGlAccountType(int line, String actual, String expected) {
         return String.format("Wrong data in Journal entries, line %s / GL account type. " //
                 + "Actual value is: %s - But expected value is: %s", line, actual, expected);

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/initializer/global/LoanProductGlobalInitializerStep.java

@@ -2509,6 +2509,36 @@ public class LoanProductGlobalInitializerStep implements FineractGlobalInitializ
         TestContext.INSTANCE.set(
                 TestContextKey.DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_INTEREST_RECALC_DAILY_CAPITALIZED_INCOME_FEE,
                 responseLoanProductsRequestLP2ProgressiveAdvPayment36030InterestRecalcCapitalizedIncomeFee);
+
+        // LP2 + zero-interest chargeOff behaviour + progressive loan schedule + horizontal + delinquent charge-off
+        // reason to GL account mapping + interest recalculation
+        // capitalized income enabled
+        final String name102 = DefaultLoanProduct.LP2_ADV_PYMNT_ZERO_INTEREST_CHARGE_OFF_DELINQUENT_REASON_INTEREST_RECALC_CAPITALIZED_INCOME
+                .getName();
+        final PostLoanProductsRequest loanProductsRequestPrgAdvZeroIntChargeOffDelinquentReasonIntRecalcCapitalizedIncome = loanProductsRequestFactory
+                .defaultLoanProductsRequestLP2ChargeOffReasonToExpenseAccountMappingsWithCapitalizedIncome()//
+                .name(name102)//
+                .isInterestRecalculationEnabled(true)//
+                .preClosureInterestCalculationStrategy(1)//
+                .rescheduleStrategyMethod(4)//
+                .interestRecalculationCompoundingMethod(0)//
+                .recalculationRestFrequencyType(2)//
+                .recalculationRestFrequencyInterval(1)//
+                .transactionProcessingStrategyCode(ADVANCED_PAYMENT_ALLOCATION.getValue())//
+                .loanScheduleType("PROGRESSIVE") //
+                .loanScheduleProcessingType("HORIZONTAL")//
+                .interestRateFrequencyType(3)//
+                .maxInterestRatePerPeriod(10.0)//
+                .paymentAllocation(List.of(//
+                        createPaymentAllocation("DEFAULT", "NEXT_INSTALLMENT"), //
+                        createPaymentAllocation("GOODWILL_CREDIT", "LAST_INSTALLMENT"), //
+                        createPaymentAllocation("MERCHANT_ISSUED_REFUND", "REAMORTIZATION"), //
+                        createPaymentAllocation("PAYOUT_REFUND", "NEXT_INSTALLMENT")));//
+        final Response<PostLoanProductsResponse> responseLoanProductsRequestPrgAdvZeroIntChargeOffDelinquentReasonIntRecalcCapitalizedIncome = loanProductsApi
+                .createLoanProduct(loanProductsRequestPrgAdvZeroIntChargeOffDelinquentReasonIntRecalcCapitalizedIncome).execute();
+        TestContext.INSTANCE.set(
+                TestContextKey.DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_ZERO_INT_CHARGE_OFF_DELINQUENT_REASON_INT_RECALC_CAPITALIZED_INCOME,
+                responseLoanProductsRequestPrgAdvZeroIntChargeOffDelinquentReasonIntRecalcCapitalizedIncome);
     }
 
     public static AdvancedPaymentData createPaymentAllocation(String transactionType, String futureInstallmentAllocationRule,

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/stepdef/common/JournalEntriesStepDef.java

@@ -26,6 +26,7 @@ import java.io.IOException;
 import java.time.format.DateTimeFormatter;
 import java.util.ArrayList;
 import java.util.List;
+import java.util.Objects;
 import java.util.stream.Collectors;
 import lombok.extern.slf4j.Slf4j;
 import org.apache.fineract.client.models.GetJournalEntriesTransactionIdResponse;
@@ -138,6 +139,82 @@ public class JournalEntriesStepDef extends AbstractStepDef {
         }
     }
 
+    @Then("Reversed loan capitalized income amortization transaction has the following Journal entries:")
+    public void capitalizedIncomeAmortizationJournalEntryDataCheck(final DataTable table) {
+        final long capitalizedIncomeAmortizationId = testContext().get(TestContextKey.LOAN_CAPITALIZED_INCOME_AMORTIZATION_ID);
+        final Response<PostLoansResponse> loanResponse = testContext().get(TestContextKey.LOAN_CREATE_RESPONSE);
+        assert loanResponse.body() != null;
+        final long loanId = loanResponse.body().getLoanId();
+        final String resourceId = String.valueOf(loanId);
+
+        List<JournalEntryTransactionItem> journalLinesActualList;
+        final String transactionId = "L" + capitalizedIncomeAmortizationId;
+        Response<GetJournalEntriesTransactionIdResponse> journalEntryDataResponse = null;
+        try {
+            journalEntryDataResponse = journalEntriesApi.retrieveAll1(//
+                    null, //
+                    null, //
+                    null, //
+                    null, //
+                    null, //
+                    null, //
+                    null, //
+                    transactionId, //
+                    null, //
+                    null, //
+                    null, //
+                    null, //
+                    null, //
+                    null, //
+                    null, //
+                    loanId, //
+                    null, //
+                    null, //
+                    true//
+            ).execute();
+            ErrorHelper.checkSuccessfulApiCall(journalEntryDataResponse);
+        } catch (IOException e) {
+            log.error("Exception", e);
+        }
+        assert journalEntryDataResponse != null;
+        assert journalEntryDataResponse.body() != null;
+        journalLinesActualList = journalEntryDataResponse.body().getPageItems();
+
+        final List<List<String>> data = table.asLists();
+        for (int i = 1; i < data.size(); i++) {
+            final List<List<String>> possibleActualValuesList = new ArrayList<>();
+            final List<String> expectedValues = data.get(i);
+            boolean containsAnyExpected = false;
+
+            for (int j = 0; j < Objects.requireNonNull(journalLinesActualList).size(); j++) {
+                final JournalEntryTransactionItem journalLinesActual = journalLinesActualList.get(j);
+                final List<String> actualValues = new ArrayList<>();
+                assert journalLinesActual.getGlAccountType() != null;
+                actualValues.add(
+                        journalLinesActual.getGlAccountType().getValue() == null ? null : journalLinesActual.getGlAccountType().getValue());
+                actualValues.add(journalLinesActual.getGlAccountCode() == null ? null : journalLinesActual.getGlAccountCode());
+                actualValues.add(journalLinesActual.getGlAccountName() == null ? null : journalLinesActual.getGlAccountName());
+                assert journalLinesActual.getEntryType() != null;
+                actualValues
+                        .add("DEBIT".equals(journalLinesActual.getEntryType().getValue()) ? String.valueOf(journalLinesActual.getAmount())
+                                : null);
+                actualValues
+                        .add("CREDIT".equals(journalLinesActual.getEntryType().getValue()) ? String.valueOf(journalLinesActual.getAmount())
+                                : null);
+                possibleActualValuesList.add(actualValues);
+
+                final boolean containsExpectedValues = possibleActualValuesList.stream()
+                        .anyMatch(actualValue -> actualValue.equals(expectedValues));
+                if (containsExpectedValues) {
+                    containsAnyExpected = true;
+                }
+            }
+            assertThat(containsAnyExpected)
+                    .as(ErrorMessageHelper.wrongValueInLineInJournalEntry(resourceId, i, possibleActualValuesList, expectedValues))
+                    .isTrue();
+        }
+    }
+
     @Then("In Loan transactions the replayed {string} transaction with date {string} has a reverted transaction pair with the following Journal entries:")
     public void revertedJournalEntryDataCheck(String transactionType, String transactionDate, DataTable table) throws IOException {
         DateTimeFormatter formatter = DateTimeFormatter.ofPattern(DATE_FORMAT);

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/stepdef/loan/LoanStepDef.java

@@ -1692,6 +1692,17 @@ public class LoanStepDef extends AbstractStepDef {
         ErrorHelper.checkSuccessfulApiCall(chargeOffResponse);
 
         Long transactionId = chargeOffResponse.body().getResourceId();
+
+        final DateTimeFormatter formatter = DateTimeFormatter.ofPattern(DATE_FORMAT);
+        final Response<GetLoansLoanIdResponse> loanDetailsResponse = loansApi.retrieveLoan(loanId, false, "transactions", "", "").execute();
+        assert loanDetailsResponse.body() != null;
+        final List<GetLoansLoanIdTransactions> transactions = loanDetailsResponse.body().getTransactions();
+        final Optional<GetLoansLoanIdTransactions> transactionsMatch = transactions.stream()
+                .filter(t -> formatter.format(t.getDate()).equals(transactionDate) && t.getType().getCapitalizedIncomeAmortization())
+                .findFirst();
+        if (transactionsMatch.isPresent()) {
+            testContext().set(TestContextKey.LOAN_CAPITALIZED_INCOME_AMORTIZATION_ID, transactionsMatch.get().getId());
+        }
         eventAssertion.assertEvent(LoanChargeOffEvent.class, transactionId).extractingData(LoanTransactionDataV1::getLoanId)
                 .isEqualTo(loanId).extractingData(LoanTransactionDataV1::getId).isEqualTo(chargeOffResponse.body().getResourceId());
     }

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/support/TestContextKey.java

@@ -149,6 +149,7 @@ public abstract class TestContextKey {
     public static final String DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_INTEREST_RECALC_DAILY_CAPITALIZED_INCOME = "loanProductCreateResponseLP2ProgressiveAdvPayment36030InterestRecalcCapitalizedIncome";
     public static final String DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_INTEREST_RECALC_DAILY_CAPITALIZED_INCOME_FEE = "loanProductCreateResponseLP2ProgressiveAdvPayment36030InterestRecalcCapitalizedIncomeFee";
     public static final String DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_INTEREST_RECALC_DAILY_MULTIDISBURSAL_CAPITALIZED_INCOME = "loanProductCreateResponseLP2ProgressiveAdvPayment36030InterestRecalcMultidisbursalCapitalizedIncome";
+    public static final String DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_ZERO_INT_CHARGE_OFF_DELINQUENT_REASON_INT_RECALC_CAPITALIZED_INCOME = "loanProductCreateResponseLP2AdvancedPaymentZeroInterestChargeOffDelinquentReasonInterestRecalculationCapitalizedIncome";
     public static final String LP2_NO_INTEREST_RECALCULATION_CHARGEBACK_ALLOCATION_INTEREST_FIRST_RESPONSE = "loanProductCreateResponseLP2NoInterestRecalculationChargebackAllocationInterestFirst";
     public static final String LP2_NO_INTEREST_RECALCULATION_CHARGEBACK_ALLOCATION_PRINCIPAL_FIRST_RESPONSE = "loanProductCreateResponseLP2NoInterestRecalculationChargebackAllocationPrincipalFirst";
     public static final String DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_INTEREST_DAILY_INTEREST_RECALCULATION_ACCELERATE_MATURITY_CHARGE_OFF_BEHAVIOUR_LAST_INSTALLMENT_STRATEGY = "loanProductCreateResponseLP2AdvancedPaymentInterestDailyInterestRecalculationAccelerateMaturityChargeOffBehaviourLastInstallmentStrategy";
@@ -209,4 +210,5 @@ public abstract class TestContextKey {
     public static final String LOAN_TRANSACTION_RESPONSE = "loanTransactionResponse";
     public static final String LOAN_CAPITALIZED_INCOME_RESPONSE = "loanCapitalizedIncomeResponse";
     public static final String LOAN_DISBURSEMENT_DETAIL_RESPONSE = "loanDisbursementDetailResponse";
+    public static final String LOAN_CAPITALIZED_INCOME_AMORTIZATION_ID = "loanCapitalizedIncomeAmortizationId";
 }

fineract-e2e-tests-runner/src/test/resources/features/LoanCapitalizedIncome.feature

@@ -269,6 +269,7 @@ Feature: Capitalized Income
       | EXPENSE   | e4           | Written off                  |        | 100.0  |
       | LIABILITY | 145024       | Deferred Capitalized Income  | 100.0  |        |
     Then LoanCapitalizedIncomeAmortizationTransactionCreatedBusinessEvent is raised on "02 January 2024"
+
   @TestRailId:C3648
   Scenario: Verify capitalized income: daily amortization - Capitalized Income type: interest
     When Admin sets the business date to "01 January 2024"
@@ -528,3 +529,194 @@ Feature: Capitalized Income
       | INCOME    | 404000       | Interest Income             |       | 0.55   |
       | LIABILITY | 145024       | Deferred Capitalized Income | 0.55  |        |
     And Loan Capitalized Income Amortization Transaction Created Business Event is created on "31 March 2024"
+
+  @TestRailId:C3661
+  Scenario: As a user I want to add capitalized income to a progressive loan after disbursement and then charge-off the loan with "delinquent" reason - amortization in case of loan charge-off event
+    When Admin sets the business date to "1 January 2024"
+    And Admin creates a client with random data
+    When Admin creates a fully customized loan with the following data:
+      | LoanProduct                                                                                 | submitted on date | with Principal | ANNUAL interest rate % | interest type     | interest calculation period | amortization type  | loanTermFrequency | loanTermFrequencyType | repaymentEvery | repaymentFrequencyType | numberOfRepayments | graceOnPrincipalPayment | graceOnInterestPayment | interest free period | Payment strategy            |
+      | LP2_ADV_PYMNT_ZERO_INTEREST_CHARGE_OFF_DELINQUENT_REASON_INTEREST_RECALC_CAPITALIZED_INCOME | 01 January 2024   | 1000           | 7                      | DECLINING_BALANCE | DAILY                       | EQUAL_INSTALLMENTS | 1                 | MONTHS                | 1              | MONTHS                 | 1                  | 0                       | 0                      | 0                    | ADVANCED_PAYMENT_ALLOCATION |
+    And Admin successfully approves the loan on "1 January 2024" with "1000" amount and expected disbursement date on "1 January 2024"
+    And Admin successfully disburse the loan on "1 January 2024" with "900" EUR transaction amount
+    Then Loan status will be "ACTIVE"
+    When Admin sets the business date to "2 January 2024"
+    And Admin adds capitalized income with "AUTOPAY" payment type to the loan on "2 January 2024" with "100" EUR transaction amount
+    Then Loan Transactions tab has the following data:
+      | Transaction date | Transaction Type   | Amount | Principal | Interest | Fees | Penalties | Loan Balance | Reverted |
+      | 01 January 2024  | Disbursement       | 900.0  | 0.0       | 0.0      | 0.0  | 0.0       | 900.0        | false    |
+      | 02 January 2024  | Capitalized Income | 100.0  | 100.0     | 0.0      | 0.0  | 0.0       | 1000.0       | false    |
+    Then Loan Transactions tab has a "CAPITALIZED_INCOME" transaction with date "02 January 2024" which has the following Journal entries:
+      | Type      | Account code | Account name                 | Debit  | Credit |
+      | ASSET     | 112601       | Loans Receivable             | 100.0  |        |
+      | LIABILITY | 145024       | Deferred Capitalized Income  |        | 100.0  |
+    Then Admin can successfully set Fraud flag to the loan
+    When Admin sets the business date to "03 February 2024"
+    And Admin does charge-off the loan with reason "DELINQUENT" on "03 February 2024"
+    Then Loan Transactions tab has a "CHARGE_OFF" transaction with date "03 February 2024" which has the following Journal entries:
+      | Type    | Account code | Account name               | Debit | Credit |
+      | ASSET   | 112601       | Loans Receivable           |       | 900.0  |
+      | ASSET   | 112603       | Interest/Fee Receivable    |       | 4.0    |
+      | EXPENSE | 744007       | Credit Loss/Bad Debt       | 900.0 |        |
+      | INCOME  | 404001       | Interest Income Charge Off | 4.0   |        |
+    Then Loan Transactions tab has the following data:
+      | Transaction date | Transaction Type                | Amount | Principal | Interest | Fees | Penalties | Loan Balance | Reverted |
+      | 01 January 2024  | Disbursement                    | 900.0  | 0.0       | 0.0      | 0.0  | 0.0       | 900.0        | false    |
+      | 02 January 2024  | Capitalized Income              | 100.0  | 100.0     | 0.0      | 0.0  | 0.0       | 1000.0       | false    |
+      | 03 February 2024 | Accrual                         | 4.0    | 0.0       | 4.0      | 0.0  | 0.0       | 0.0          | false    |
+      | 03 February 2024 | Charge-off                      | 904.0  | 900.0     | 4.0      | 0.0  | 0.0       | 0.0          | false    |
+      | 03 February 2024 | Capitalized Income Amortization | 100.0  | 0.0       | 100.0    | 0.0  | 0.0       | 0.0          | false    |
+    Then Loan Transactions tab has a "CAPITALIZED_INCOME_AMORTIZATION" transaction with date "03 February 2024" which has the following Journal entries:
+      | Type      | Account code | Account name                 | Debit  | Credit |
+      | EXPENSE   | 744007       | Credit Loss/Bad Debt         |        | 100.0  |
+      | LIABILITY | 145024       | Deferred Capitalized Income  | 100.0  |        |
+    Then LoanCapitalizedIncomeAmortizationTransactionCreatedBusinessEvent is raised on "03 February 2024"
+
+  @TestRailId:C3662
+  Scenario: As a user I want to add capitalized income to a progressive loan after disbursement and then charge-off a fraud loan - amortization in case of loan charge-off event
+    When Admin sets the business date to "1 January 2024"
+    And Admin creates a client with random data
+    When Admin creates a fully customized loan with the following data:
+      | LoanProduct                                                                                 | submitted on date | with Principal | ANNUAL interest rate % | interest type     | interest calculation period | amortization type  | loanTermFrequency | loanTermFrequencyType | repaymentEvery | repaymentFrequencyType | numberOfRepayments | graceOnPrincipalPayment | graceOnInterestPayment | interest free period | Payment strategy            |
+      | LP2_ADV_PYMNT_ZERO_INTEREST_CHARGE_OFF_DELINQUENT_REASON_INTEREST_RECALC_CAPITALIZED_INCOME | 01 January 2024   | 1000           | 7                      | DECLINING_BALANCE | DAILY                       | EQUAL_INSTALLMENTS | 1                 | MONTHS                | 1              | MONTHS                 | 1                  | 0                       | 0                      | 0                    | ADVANCED_PAYMENT_ALLOCATION |
+    And Admin successfully approves the loan on "1 January 2024" with "1000" amount and expected disbursement date on "1 January 2024"
+    And Admin successfully disburse the loan on "1 January 2024" with "900" EUR transaction amount
+    Then Loan status will be "ACTIVE"
+    When Admin sets the business date to "2 January 2024"
+    And Admin adds capitalized income with "AUTOPAY" payment type to the loan on "2 January 2024" with "100" EUR transaction amount
+    Then Loan Transactions tab has the following data:
+      | Transaction date | Transaction Type   | Amount | Principal | Interest | Fees | Penalties | Loan Balance | Reverted |
+      | 01 January 2024  | Disbursement       | 900.0  | 0.0       | 0.0      | 0.0  | 0.0       | 900.0        | false    |
+      | 02 January 2024  | Capitalized Income | 100.0  | 100.0     | 0.0      | 0.0  | 0.0       | 1000.0       | false    |
+    Then Loan Transactions tab has a "CAPITALIZED_INCOME" transaction with date "02 January 2024" which has the following Journal entries:
+      | Type      | Account code | Account name                 | Debit  | Credit |
+      | ASSET     | 112601       | Loans Receivable             | 100.0  |        |
+      | LIABILITY | 145024       | Deferred Capitalized Income  |        | 100.0  |
+    Then Admin can successfully set Fraud flag to the loan
+    When Admin sets the business date to "03 February 2024"
+    And Admin does charge-off the loan on "03 February 2024"
+    Then Loan Transactions tab has a "CHARGE_OFF" transaction with date "03 February 2024" which has the following Journal entries:
+      | Type    | Account code | Account name               | Debit | Credit |
+      | ASSET   | 112601       | Loans Receivable           |       | 900.0  |
+      | ASSET   | 112603       | Interest/Fee Receivable    |       | 4.0    |
+      | EXPENSE | 744037       | Credit Loss/Bad Debt-Fraud | 900.0 |        |
+      | INCOME  | 404001       | Interest Income Charge Off | 4.0   |        |
+    Then Loan Transactions tab has the following data:
+      | Transaction date | Transaction Type                | Amount | Principal | Interest | Fees | Penalties | Loan Balance | Reverted |
+      | 01 January 2024  | Disbursement                    | 900.0  | 0.0       | 0.0      | 0.0  | 0.0       | 900.0        | false    |
+      | 02 January 2024  | Capitalized Income              | 100.0  | 100.0     | 0.0      | 0.0  | 0.0       | 1000.0       | false    |
+      | 03 February 2024 | Accrual                         | 4.0    | 0.0       | 4.0      | 0.0  | 0.0       | 0.0          | false    |
+      | 03 February 2024 | Charge-off                      | 904.0  | 900.0     | 4.0      | 0.0  | 0.0       | 0.0          | false    |
+      | 03 February 2024 | Capitalized Income Amortization | 100.0  | 0.0       | 100.0    | 0.0  | 0.0       | 0.0          | false    |
+    Then Loan Transactions tab has a "CAPITALIZED_INCOME_AMORTIZATION" transaction with date "03 February 2024" which has the following Journal entries:
+      | Type      | Account code | Account name                 | Debit  | Credit |
+      | EXPENSE   | 744037       | Credit Loss/Bad Debt-Fraud   |        | 100.0  |
+      | LIABILITY | 145024       | Deferred Capitalized Income  | 100.0  |        |
+    Then LoanCapitalizedIncomeAmortizationTransactionCreatedBusinessEvent is raised on "03 February 2024"
+
+  @TestRailId:C3663
+  Scenario: As a user I want to add capitalized income to a progressive loan after disbursement and then charge-off the loan - amortization in case of loan charge-off event
+    When Admin sets the business date to "1 January 2024"
+    And Admin creates a client with random data
+    When Admin creates a fully customized loan with the following data:
+      | LoanProduct                                                                                 | submitted on date | with Principal | ANNUAL interest rate % | interest type     | interest calculation period | amortization type  | loanTermFrequency | loanTermFrequencyType | repaymentEvery | repaymentFrequencyType | numberOfRepayments | graceOnPrincipalPayment | graceOnInterestPayment | interest free period | Payment strategy            |
+      | LP2_ADV_PYMNT_ZERO_INTEREST_CHARGE_OFF_DELINQUENT_REASON_INTEREST_RECALC_CAPITALIZED_INCOME | 01 January 2024   | 1000           | 7                      | DECLINING_BALANCE | DAILY                       | EQUAL_INSTALLMENTS | 1                 | MONTHS                | 1              | MONTHS                 | 1                  | 0                       | 0                      | 0                    | ADVANCED_PAYMENT_ALLOCATION |
+    And Admin successfully approves the loan on "1 January 2024" with "1000" amount and expected disbursement date on "1 January 2024"
+    And Admin successfully disburse the loan on "1 January 2024" with "900" EUR transaction amount
+    Then Loan status will be "ACTIVE"
+    When Admin sets the business date to "2 January 2024"
+    And Admin adds capitalized income with "AUTOPAY" payment type to the loan on "2 January 2024" with "100" EUR transaction amount
+    Then Loan Transactions tab has the following data:
+      | Transaction date | Transaction Type   | Amount | Principal | Interest | Fees | Penalties | Loan Balance | Reverted |
+      | 01 January 2024  | Disbursement       | 900.0  | 0.0       | 0.0      | 0.0  | 0.0       | 900.0        | false    |
+      | 02 January 2024  | Capitalized Income | 100.0  | 100.0     | 0.0      | 0.0  | 0.0       | 1000.0       | false    |
+    Then Loan Transactions tab has a "CAPITALIZED_INCOME" transaction with date "02 January 2024" which has the following Journal entries:
+      | Type      | Account code | Account name                 | Debit  | Credit |
+      | ASSET     | 112601       | Loans Receivable             | 100.0  |        |
+      | LIABILITY | 145024       | Deferred Capitalized Income  |        | 100.0  |
+    Then Admin can successfully set Fraud flag to the loan
+    When Admin sets the business date to "03 February 2024"
+    And Admin does charge-off the loan with reason "DELINQUENT" on "03 February 2024"
+    Then Loan Transactions tab has a "CHARGE_OFF" transaction with date "03 February 2024" which has the following Journal entries:
+      | Type    | Account code | Account name               | Debit | Credit |
+      | ASSET   | 112601       | Loans Receivable           |       | 900.0  |
+      | ASSET   | 112603       | Interest/Fee Receivable    |       | 4.0    |
+      | EXPENSE | 744007       | Credit Loss/Bad Debt       | 900.0 |        |
+      | INCOME  | 404001       | Interest Income Charge Off | 4.0   |        |
+    Then Loan Transactions tab has the following data:
+      | Transaction date | Transaction Type                | Amount | Principal | Interest | Fees | Penalties | Loan Balance | Reverted |
+      | 01 January 2024  | Disbursement                    | 900.0  | 0.0       | 0.0      | 0.0  | 0.0       | 900.0        | false    |
+      | 02 January 2024  | Capitalized Income              | 100.0  | 100.0     | 0.0      | 0.0  | 0.0       | 1000.0       | false    |
+      | 03 February 2024 | Accrual                         | 4.0    | 0.0       | 4.0      | 0.0  | 0.0       | 0.0          | false    |
+      | 03 February 2024 | Charge-off                      | 904.0  | 900.0     | 4.0      | 0.0  | 0.0       | 0.0          | false    |
+      | 03 February 2024 | Capitalized Income Amortization | 100.0  | 0.0       | 100.0    | 0.0  | 0.0       | 0.0          | false    |
+    Then Loan Transactions tab has a "CAPITALIZED_INCOME_AMORTIZATION" transaction with date "03 February 2024" which has the following Journal entries:
+      | Type      | Account code | Account name                 | Debit  | Credit |
+      | EXPENSE   | 744007       | Credit Loss/Bad Debt         |        | 100.0  |
+      | LIABILITY | 145024       | Deferred Capitalized Income  | 100.0  |        |
+    Then LoanCapitalizedIncomeAmortizationTransactionCreatedBusinessEvent is raised on "03 February 2024"
+
+  @TestRailId:C3664
+  Scenario: As a user I want to add capitalized income to a progressive loan after disbursement and then undo the charge-off transaction with "delinquent" reason - amortization in case of loan charge-off event should also be reversed
+    When Admin sets the business date to "1 January 2024"
+    And Admin creates a client with random data
+    When Admin creates a fully customized loan with the following data:
+      | LoanProduct                                                                                 | submitted on date | with Principal | ANNUAL interest rate % | interest type     | interest calculation period | amortization type  | loanTermFrequency | loanTermFrequencyType | repaymentEvery | repaymentFrequencyType | numberOfRepayments | graceOnPrincipalPayment | graceOnInterestPayment | interest free period | Payment strategy            |
+      | LP2_ADV_PYMNT_ZERO_INTEREST_CHARGE_OFF_DELINQUENT_REASON_INTEREST_RECALC_CAPITALIZED_INCOME | 01 January 2024   | 1000           | 7                      | DECLINING_BALANCE | DAILY                       | EQUAL_INSTALLMENTS | 1                 | MONTHS                | 1              | MONTHS                 | 1                  | 0                       | 0                      | 0                    | ADVANCED_PAYMENT_ALLOCATION |
+    And Admin successfully approves the loan on "1 January 2024" with "1000" amount and expected disbursement date on "1 January 2024"
+    And Admin successfully disburse the loan on "1 January 2024" with "900" EUR transaction amount
+    Then Loan status will be "ACTIVE"
+    When Admin sets the business date to "2 January 2024"
+    And Admin adds capitalized income with "AUTOPAY" payment type to the loan on "2 January 2024" with "100" EUR transaction amount
+    Then Loan Transactions tab has the following data:
+      | Transaction date | Transaction Type   | Amount | Principal | Interest | Fees | Penalties | Loan Balance | Reverted |
+      | 01 January 2024  | Disbursement       | 900.0  | 0.0       | 0.0      | 0.0  | 0.0       | 900.0        | false    |
+      | 02 January 2024  | Capitalized Income | 100.0  | 100.0     | 0.0      | 0.0  | 0.0       | 1000.0       | false    |
+    Then Loan Transactions tab has a "CAPITALIZED_INCOME" transaction with date "02 January 2024" which has the following Journal entries:
+      | Type      | Account code | Account name                 | Debit  | Credit |
+      | ASSET     | 112601       | Loans Receivable             | 100.0  |        |
+      | LIABILITY | 145024       | Deferred Capitalized Income  |        | 100.0  |
+    Then Admin can successfully set Fraud flag to the loan
+    When Admin sets the business date to "03 February 2024"
+    And Admin does charge-off the loan with reason "DELINQUENT" on "03 February 2024"
+    Then Loan Transactions tab has a "CHARGE_OFF" transaction with date "03 February 2024" which has the following Journal entries:
+      | Type    | Account code | Account name               | Debit | Credit |
+      | ASSET   | 112601       | Loans Receivable           |       | 900.0  |
+      | ASSET   | 112603       | Interest/Fee Receivable    |       | 4.0    |
+      | EXPENSE | 744007       | Credit Loss/Bad Debt       | 900.0 |        |
+      | INCOME  | 404001       | Interest Income Charge Off | 4.0   |        |
+    Then Loan Transactions tab has the following data:
+      | Transaction date | Transaction Type                | Amount | Principal | Interest | Fees | Penalties | Loan Balance | Reverted |
+      | 01 January 2024  | Disbursement                    | 900.0  | 0.0       | 0.0      | 0.0  | 0.0       | 900.0        | false    |
+      | 02 January 2024  | Capitalized Income              | 100.0  | 100.0     | 0.0      | 0.0  | 0.0       | 1000.0       | false    |
+      | 03 February 2024 | Accrual                         | 4.0    | 0.0       | 4.0      | 0.0  | 0.0       | 0.0          | false    |
+      | 03 February 2024 | Charge-off                      | 904.0  | 900.0     | 4.0      | 0.0  | 0.0       | 0.0          | false    |
+      | 03 February 2024 | Capitalized Income Amortization | 100.0  | 0.0       | 100.0    | 0.0  | 0.0       | 0.0          | false    |
+    Then Loan Transactions tab has a "CAPITALIZED_INCOME_AMORTIZATION" transaction with date "03 February 2024" which has the following Journal entries:
+      | Type      | Account code | Account name                 | Debit  | Credit |
+      | EXPENSE   | 744007       | Credit Loss/Bad Debt         |        | 100.0  |
+      | LIABILITY | 145024       | Deferred Capitalized Income  | 100.0  |        |
+    Then LoanCapitalizedIncomeAmortizationTransactionCreatedBusinessEvent is raised on "03 February 2024"
+    Then Admin does a charge-off undo the loan
+    Then Loan Transactions tab has a "CHARGE_OFF" transaction with date "03 February 2024" which has the following Journal entries:
+      | Type    | Account code | Account name               | Debit | Credit |
+      | ASSET   | 112601       | Loans Receivable           |       | 900.0  |
+      | ASSET   | 112603       | Interest/Fee Receivable    |       | 4.0    |
+      | EXPENSE | 744007       | Credit Loss/Bad Debt       | 900.0 |        |
+      | INCOME  | 404001       | Interest Income Charge Off | 4.0   |        |
+      | ASSET   | 112601       | Loans Receivable           | 900.0 |        |
+      | ASSET   | 112603       | Interest/Fee Receivable    | 4.0   |        |
+      | EXPENSE | 744007       | Credit Loss/Bad Debt       |       | 900.0  |
+      | INCOME  | 404001       | Interest Income Charge Off |       | 4.0    |
+    Then Loan Transactions tab has the following data:
+      | Transaction date | Transaction Type                | Amount | Principal | Interest | Fees | Penalties | Loan Balance | Reverted |
+      | 01 January 2024  | Disbursement                    | 900.0  | 0.0       | 0.0      | 0.0  | 0.0       | 900.0        | false    |
+      | 02 January 2024  | Capitalized Income              | 100.0  | 100.0     | 0.0      | 0.0  | 0.0       | 1000.0       | false    |
+      | 03 February 2024 | Accrual                         | 4.0    | 0.0       | 4.0      | 0.0  | 0.0       | 0.0          | false    |
+      | 03 February 2024 | Charge-off                      | 904.0  | 900.0     | 4.0      | 0.0  | 0.0       | 0.0          | true     |
+    Then Reversed loan capitalized income amortization transaction has the following Journal entries:
+      | Type      | Account code | Account name                 | Debit  | Credit |
+      | EXPENSE   | 744007       | Credit Loss/Bad Debt         |        | 100.0  |
+      | LIABILITY | 145024       | Deferred Capitalized Income  | 100.0  |        |
+      | EXPENSE   | 744007       | Credit Loss/Bad Debt         | 100.0  |        |
+      | LIABILITY | 145024       | Deferred Capitalized Income  |        | 100.0  |

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/Loan.java

@@ -2167,7 +2167,8 @@ public class Loan extends AbstractAuditableWithUTCDateTimeCustom<Long> {
 
     public LoanTransaction getLastUserTransaction() {
         return getLoanTransactions().stream() //
-                .filter(t -> t.isNotReversed() && !(t.isAccrual() || t.isAccrualAdjustment() || t.isIncomePosting())) //
+                .filter(t -> t.isNotReversed()
+                        && !(t.isAccrual() || t.isAccrualAdjustment() || t.isIncomePosting() || t.isCapitalizedIncomeAmortization())) //
                 .reduce((first, second) -> second) //
                 .orElse(null);
     }

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/LoanTransaction.java

@@ -646,6 +646,10 @@ public class LoanTransaction extends AbstractAuditableWithUTCDateTimeCustom<Long
         return LoanTransactionType.CAPITALIZED_INCOME.equals(getTypeOf()) && isNotReversed();
     }
 
+    public boolean isCapitalizedIncomeAmortization() {
+        return LoanTransactionType.CAPITALIZED_INCOME_AMORTIZATION.equals(getTypeOf()) && isNotReversed();
+    }
+
     public boolean isWaiver() {
         return isInterestWaiver() || isChargesWaiver();
     }

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanCapitalizedIncomeAmortizationProcessingService.java

@@ -19,9 +19,14 @@
 package org.apache.fineract.portfolio.loanaccount.service;
 
 import org.apache.fineract.portfolio.loanaccount.domain.Loan;
+import org.apache.fineract.portfolio.loanaccount.domain.LoanTransaction;
 import org.springframework.lang.NonNull;
 
 public interface LoanCapitalizedIncomeAmortizationProcessingService {
 
     void processCapitalizedIncomeAmortizationOnLoanClosure(@NonNull Loan loan);
+
+    void processCapitalizedIncomeAmortizationOnLoanChargeOff(@NonNull Loan loan);
+
+    void processCapitalizedIncomeAmortizationOnLoanUndoChargeOff(@NonNull LoanTransaction loanTransaction);
 }

fineract-provider/src/main/java/org/apache/fineract/accounting/journalentry/service/AccrualBasedAccountingProcessorForLoan.java

@@ -173,6 +173,16 @@ public class AccrualBasedAccountingProcessorForLoan implements AccountingProcess
 
     private void createJournalEntriesForCapitalizedIncomeAmortization(final LoanDTO loanDTO, final LoanTransactionDTO loanTransactionDTO,
             final Office office) {
+        final boolean isMarkedAsChargeOff = loanDTO.isMarkedAsChargeOff();
+        if (isMarkedAsChargeOff) {
+            createJournalEntriesForChargeOffLoanCapitalizedIncomeAmortization(loanDTO, loanTransactionDTO, office);
+        } else {
+            createJournalEntriesForLoanCapitalizedIncomeAmortization(loanDTO, loanTransactionDTO, office);
+        }
+    }
+
+    private void createJournalEntriesForLoanCapitalizedIncomeAmortization(final LoanDTO loanDTO,
+            final LoanTransactionDTO loanTransactionDTO, final Office office) {
         // loan properties
         final Long loanProductId = loanDTO.getLoanProductId();
         final Long loanId = loanDTO.getLoanId();
@@ -218,6 +228,73 @@ public class AccrualBasedAccountingProcessorForLoan implements AccountingProcess
         }
     }
 
+    private void createJournalEntriesForChargeOffLoanCapitalizedIncomeAmortization(final LoanDTO loanDTO,
+            final LoanTransactionDTO loanTransactionDTO, final Office office) {
+        // loan properties
+        final Long loanProductId = loanDTO.getLoanProductId();
+        final boolean isMarkedFraud = loanDTO.isMarkedAsFraud();
+        final Long loanId = loanDTO.getLoanId();
+        final String currencyCode = loanDTO.getCurrencyCode();
+
+        // transaction properties
+        final String transactionId = loanTransactionDTO.getTransactionId();
+        final LocalDate transactionDate = loanTransactionDTO.getTransactionDate();
+        final BigDecimal interestAmount = loanTransactionDTO.getInterest();
+        final BigDecimal feesAmount = loanTransactionDTO.getFees();
+        final Long paymentTypeId = loanTransactionDTO.getPaymentTypeId();
+        final GLAccountBalanceHolder glAccountBalanceHolder = new GLAccountBalanceHolder();
+        final Long chargeOffReasonCodeValue = loanDTO.getChargeOffReasonCodeValue();
+
+        final ProductToGLAccountMapping mapping = chargeOffReasonCodeValue != null
+                ? helper.getChargeOffMappingByCodeValue(loanProductId, PortfolioProductType.LOAN, chargeOffReasonCodeValue)
+                : null;
+
+        if (mapping != null) {
+            final GLAccount accountDebit = this.helper.getLinkedGLAccountForLoanProduct(loanProductId,
+                    AccrualAccountsForLoan.DEFERRED_INCOME_LIABILITY.getValue(), paymentTypeId);
+            // handle interest payment
+            if (MathUtil.isGreaterThanZero(interestAmount)) {
+                glAccountBalanceHolder.addToCredit(mapping.getGlAccount(), interestAmount);
+                glAccountBalanceHolder.addToDebit(accountDebit, interestAmount);
+            }
+            // handle fees payment
+            if (MathUtil.isGreaterThanZero(feesAmount)) {
+                glAccountBalanceHolder.addToCredit(mapping.getGlAccount(), feesAmount);
+                glAccountBalanceHolder.addToDebit(accountDebit, feesAmount);
+            }
+        } else {
+            final AccrualAccountsForLoan creditAccountType = isMarkedFraud ? AccrualAccountsForLoan.CHARGE_OFF_FRAUD_EXPENSE
+                    : AccrualAccountsForLoan.CHARGE_OFF_EXPENSE;
+            // handle interest payment
+            if (MathUtil.isGreaterThanZero(interestAmount)) {
+                populateCreditDebitMaps(loanProductId, interestAmount, paymentTypeId, creditAccountType.getValue(),
+                        AccrualAccountsForLoan.DEFERRED_INCOME_LIABILITY.getValue(), glAccountBalanceHolder);
+            }
+            // handle fees payment
+            if (MathUtil.isGreaterThanZero(feesAmount)) {
+                populateCreditDebitMaps(loanProductId, feesAmount, paymentTypeId, creditAccountType.getValue(),
+                        AccrualAccountsForLoan.DEFERRED_INCOME_LIABILITY.getValue(), glAccountBalanceHolder);
+            }
+        }
+
+        // create credit entries
+        for (Map.Entry<Long, BigDecimal> creditEntry : glAccountBalanceHolder.getCreditBalances().entrySet()) {
+            if (MathUtil.isGreaterThanZero(creditEntry.getValue())) {
+                GLAccount glAccount = glAccountBalanceHolder.getGlAccountMap().get(creditEntry.getKey());
+                this.helper.createCreditJournalEntryForLoan(office, currencyCode, loanId, transactionId, transactionDate,
+                        creditEntry.getValue(), glAccount);
+            }
+        }
+        // create debit entries
+        for (Map.Entry<Long, BigDecimal> debitEntry : glAccountBalanceHolder.getDebitBalances().entrySet()) {
+            if (MathUtil.isGreaterThanZero(debitEntry.getValue())) {
+                GLAccount glAccount = glAccountBalanceHolder.getGlAccountMap().get(debitEntry.getKey());
+                this.helper.createDebitJournalEntryForLoan(office, currencyCode, loanId, transactionId, transactionDate,
+                        debitEntry.getValue(), glAccount);
+            }
+        }
+    }
+
     private void createJournalEntriesForInterestPaymentWaiverOrInterestRefund(LoanDTO loanDTO, LoanTransactionDTO loanTransactionDTO,
             Office office) {
         final Long loanProductId = loanDTO.getLoanProductId();

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanCapitalizedIncomeAmortizationEventService.java

@@ -24,9 +24,12 @@ import lombok.extern.slf4j.Slf4j;
 import org.apache.fineract.infrastructure.event.business.BusinessEventListener;
 import org.apache.fineract.infrastructure.event.business.domain.loan.LoanBalanceChangedBusinessEvent;
 import org.apache.fineract.infrastructure.event.business.domain.loan.LoanCloseBusinessEvent;
+import org.apache.fineract.infrastructure.event.business.domain.loan.transaction.LoanChargeOffPostBusinessEvent;
+import org.apache.fineract.infrastructure.event.business.domain.loan.transaction.LoanUndoChargeOffBusinessEvent;
 import org.apache.fineract.infrastructure.event.business.service.BusinessEventNotifierService;
 import org.apache.fineract.portfolio.loanaccount.domain.Loan;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanStatus;
+import org.apache.fineract.portfolio.loanaccount.domain.LoanTransaction;
 
 @Slf4j
 @RequiredArgsConstructor
@@ -39,6 +42,9 @@ public class LoanCapitalizedIncomeAmortizationEventService {
     public void addListeners() {
         businessEventNotifierService.addPreBusinessEventListener(LoanCloseBusinessEvent.class, new LoanCloseListener());
         businessEventNotifierService.addPostBusinessEventListener(LoanBalanceChangedBusinessEvent.class, new LoanBalanceChangedListener());
+        businessEventNotifierService.addPostBusinessEventListener(LoanChargeOffPostBusinessEvent.class, new LoanChargeOffEventListener());
+        businessEventNotifierService.addPostBusinessEventListener(LoanUndoChargeOffBusinessEvent.class,
+                new LoanUndoChargeOffEventListener());
     }
 
     private final class LoanCloseListener implements BusinessEventListener<LoanCloseBusinessEvent> {
@@ -68,4 +74,32 @@ public class LoanCapitalizedIncomeAmortizationEventService {
             }
         }
     }
+
+    private final class LoanChargeOffEventListener implements BusinessEventListener<LoanChargeOffPostBusinessEvent> {
+
+        @Override
+        public void onBusinessEvent(final LoanChargeOffPostBusinessEvent event) {
+            final LoanTransaction loanTransaction = event.get();
+            final Loan loan = loanTransaction.getLoan();
+            if (loan.getLoanProductRelatedDetail().isEnableIncomeCapitalization() && loan.isChargedOff() && loanTransaction.isChargeOff()) {
+                log.debug("Loan charge-off on capitalized income amortization for loan {}", loan.getId());
+                loanCapitalizedIncomeAmortizationProcessingService.processCapitalizedIncomeAmortizationOnLoanChargeOff(loan);
+            }
+        }
+    }
+
+    private final class LoanUndoChargeOffEventListener implements BusinessEventListener<LoanUndoChargeOffBusinessEvent> {
+
+        @Override
+        public void onBusinessEvent(final LoanUndoChargeOffBusinessEvent event) {
+            final LoanTransaction loanTransaction = event.get();
+            final Loan loan = loanTransaction.getLoan();
+            final LoanStatus status = loan.getStatus();
+            if (loan.getLoanProductRelatedDetail().isEnableIncomeCapitalization() && loanTransaction.getTypeOf().isChargeOff()
+                    && !(loan.isChargedOff() || status.isClosedObligationsMet() || status.isClosedWrittenOff() || status.isOverpaid())) {
+                log.debug("Loan undo charge-off on capitalized income amortization for loan {}", loan.getId());
+                loanCapitalizedIncomeAmortizationProcessingService.processCapitalizedIncomeAmortizationOnLoanUndoChargeOff(loanTransaction);
+            }
+        }
+    }
 }

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanCapitalizedIncomeAmortizationProcessingServiceImpl.java

@@ -20,9 +20,12 @@ package org.apache.fineract.portfolio.loanaccount.service;
 
 import java.math.BigDecimal;
 import java.time.LocalDate;
+import java.util.List;
 import lombok.RequiredArgsConstructor;
 import org.apache.fineract.infrastructure.configuration.domain.ConfigurationDomainService;
 import org.apache.fineract.infrastructure.core.domain.ExternalId;
+import org.apache.fineract.infrastructure.core.service.DateUtils;
+import org.apache.fineract.infrastructure.event.business.domain.loan.LoanAdjustTransactionBusinessEvent;
 import org.apache.fineract.infrastructure.event.business.domain.loan.transaction.LoanCapitalizedIncomeAmortizationTransactionCreatedBusinessEvent;
 import org.apache.fineract.infrastructure.event.business.service.BusinessEventNotifierService;
 import org.apache.fineract.portfolio.loanaccount.domain.Loan;
@@ -42,31 +45,84 @@ public class LoanCapitalizedIncomeAmortizationProcessingServiceImpl implements L
     private final LoanTransactionRepository loanTransactionRepository;
     private final LoanCapitalizedIncomeBalanceRepository loanCapitalizedIncomeBalanceRepository;
     private final BusinessEventNotifierService businessEventNotifierService;
+    private final LoanJournalEntryPoster journalEntryPoster;
 
     @Override
     @Transactional
     public void processCapitalizedIncomeAmortizationOnLoanClosure(@NotNull final Loan loan) {
-        final LocalDate finalAmortizationTransactionDate = getFinalCapitalizedIncomeAmortizationTransactionDate(loan);
+        final LocalDate transactionDate = getFinalCapitalizedIncomeAmortizationTransactionDate(loan);
-        ExternalId externalId = ExternalId.empty();
+        final LoanTransaction amortizationTransaction = createCapitalizedIncomeAmortizationTransaction(loan, transactionDate, false);
-        BigDecimal totalUnrecognizedAmountCapitalizedIncomeAmount = BigDecimal.ZERO;
+        businessEventNotifierService
+                .notifyPostBusinessEvent(new LoanCapitalizedIncomeAmortizationTransactionCreatedBusinessEvent(amortizationTransaction));
+    }
 
-        final boolean isExternalIdAutoGenerationEnabled = configurationDomainService.isExternalIdAutoGenerationEnabled();
+    @Override
-        if (isExternalIdAutoGenerationEnabled) {
+    @Transactional
+    public void processCapitalizedIncomeAmortizationOnLoanChargeOff(@NotNull final Loan loan) {
+        final List<Long> existingTransactionIds = loan.findExistingTransactionIds();
+        final List<Long> existingReversedTransactionIds = loan.findExistingReversedTransactionIds();
+
+        LocalDate transactionDate = loan.getChargedOffOnDate();
+        if (transactionDate == null) {
+            transactionDate = DateUtils.getBusinessLocalDate();
+        }
+
+        final LoanTransaction amortizationTransaction = createCapitalizedIncomeAmortizationTransaction(loan, transactionDate, true);
+        journalEntryPoster.postJournalEntries(loan, existingTransactionIds, existingReversedTransactionIds);
+        businessEventNotifierService
+                .notifyPostBusinessEvent(new LoanCapitalizedIncomeAmortizationTransactionCreatedBusinessEvent(amortizationTransaction));
+    }
+
+    private LoanTransaction createCapitalizedIncomeAmortizationTransaction(final Loan loan, final LocalDate transactionDate,
+            final boolean isChargeOff) {
+        ExternalId externalId = ExternalId.empty();
+        BigDecimal totalUnrecognizedAmount = BigDecimal.ZERO;
+
+        if (configurationDomainService.isExternalIdAutoGenerationEnabled()) {
             externalId = ExternalId.generate();
         }
 
-        for (LoanCapitalizedIncomeBalance balance : loanCapitalizedIncomeBalanceRepository.findAllByLoanId(loan.getId())) {
+        final List<LoanCapitalizedIncomeBalance> balances = loanCapitalizedIncomeBalanceRepository.findAllByLoanId(loan.getId());
-            totalUnrecognizedAmountCapitalizedIncomeAmount = totalUnrecognizedAmountCapitalizedIncomeAmount
+        for (LoanCapitalizedIncomeBalance balance : balances) {
-                    .add(balance.getUnrecognizedAmount());
+            final BigDecimal unrecognizedAmount = balance.getUnrecognizedAmount();
+            totalUnrecognizedAmount = totalUnrecognizedAmount.add(unrecognizedAmount);
+            if (isChargeOff) {
+                balance.setChargedOffAmount(unrecognizedAmount);
+            }
             balance.setUnrecognizedAmount(BigDecimal.ZERO);
         }
 
-        final LoanTransaction finalCapitalizedIncomeAmortization = LoanTransaction.capitalizedIncomeAmortization(loan, loan.getOffice(),
+        final LoanTransaction amortizationTransaction = LoanTransaction.capitalizedIncomeAmortization(loan, loan.getOffice(),
-                finalAmortizationTransactionDate, totalUnrecognizedAmountCapitalizedIncomeAmount, externalId);
+                transactionDate, totalUnrecognizedAmount, externalId);
-        loan.addLoanTransaction(finalCapitalizedIncomeAmortization);
+
-        loanTransactionRepository.saveAndFlush(finalCapitalizedIncomeAmortization);
+        loan.addLoanTransaction(amortizationTransaction);
-        businessEventNotifierService.notifyPostBusinessEvent(
+        loanTransactionRepository.saveAndFlush(amortizationTransaction);
-                new LoanCapitalizedIncomeAmortizationTransactionCreatedBusinessEvent(finalCapitalizedIncomeAmortization));
+
+        return amortizationTransaction;
+    }
+
+    @Override
+    @Transactional
+    public void processCapitalizedIncomeAmortizationOnLoanUndoChargeOff(@NotNull final LoanTransaction loanTransaction) {
+        final Loan loan = loanTransaction.getLoan();
+        final List<Long> existingTransactionIds = loan.findExistingTransactionIds();
+        final List<Long> existingReversedTransactionIds = loan.findExistingReversedTransactionIds();
+
+        loan.getLoanTransactions().stream().filter(LoanTransaction::isCapitalizedIncomeAmortization)
+                .filter(transaction -> transaction.getTransactionDate().equals(loanTransaction.getTransactionDate()))
+                .forEach(transaction -> {
+                    transaction.reverse();
+                    final LoanAdjustTransactionBusinessEvent.Data data = new LoanAdjustTransactionBusinessEvent.Data(transaction);
+                    businessEventNotifierService.notifyPostBusinessEvent(new LoanAdjustTransactionBusinessEvent(data));
+
+                });
+
+        for (LoanCapitalizedIncomeBalance balance : loanCapitalizedIncomeBalanceRepository.findAllByLoanId(loan.getId())) {
+            balance.setUnrecognizedAmount(balance.getChargedOffAmount());
+            balance.setChargedOffAmount(BigDecimal.ZERO);
+        }
+
+        journalEntryPoster.postJournalEntries(loan, existingTransactionIds, existingReversedTransactionIds);
     }
 
     private LocalDate getFinalCapitalizedIncomeAmortizationTransactionDate(final Loan loan) {