CCP vs PNC, page-3

I do not clearly understand how the valuation of PDLs differs between PNC and the rest of the sector, but mainly CCP. The obverse side of the same coin, and the more important one, is reported profitability on a time basis. Is PNC reporting profits earlier in the lifetime of the purchased debt than CCP is? I think the answer is yes, which if true, raises the question, why a company would do that?

Could somebody give me a hypothetical example of how PNC and CCP would account for a $100x purchased debt portfolio of equal quality over ten years, or a shorter time. That is, what would be expensed (however called – CCP calls it PDL Amortisation), and what would the Balance Sheet reflect as that portfolio's asset value at points in time 0yr, 1yr, 2yr, 3yr, etc. $100x could be $100K, or $10K. I mentioned ten years, because I recall that PNC expenses the value over ten years, and CCP does so after five or six years.

My gut feeling is that PNC want to look good early, rather than salt away buffers for later years. It is not a question of what is right from a legal, accounting standards, and taxation perspective – the issue is inter-company comparability for share valuation purposes.

The issue of when a company recognises revenue and profit is very elastic. I hold shares in FRI, which builds large apartment buildings that take years to plan, secure approvals, construct and sell unit by unit. FRI only recognises revenue and profit on settlements of individual units – no attempt is made to smooth the NPAT trajectory via some sort of work-in-progress technique, or via fair-value property valuations (except for a few buildings built and held as rental properties). Hence, FRI can report extremely low-profit half years, or high-profit ones, depending on when constructions are completed, because these are followed by a surge of settlements.