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Hello Mike
Hope you are fine.My question is about the accounting entries for fair value hedge.
For example suppose the fair value of an asset (hedged item) at the beginning of the year is 100$. At the year end, the fair value of the hedged item becomes $80 and the fair value of the hedging instrument increases by $25.Are the following accounting entries OK?
Dr Hedging instrument (SoFP) $25
Cr Hedged item (SoFP) $20
Cr net gain (P&L) $5And if the above entries are correct, then would you please let me know how we should recognise the hedging instrument in the SoFP? It should be recognised as ”Financial asset” in the ”Current Asset” section, yes ??
Thank you in advance
“Current asset” may not be appropriate if it cannot be realized within thelve months
Otherwise, it seems ok to me!
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