Interest Rate Swap As Fair Value Hedge (Convert Fixed To Variable Interest Rate On Debt)
15.6 هزار بار بازدید -
11 سال پیش
-
Accounting for an Interest Rate
Accounting for an Interest Rate Swap as fair value hedge, with the interest rate swap convert from a fixed interest rate on debt instrument (bond payable or note payable) to a variable interest rate, swap contract allows the debt holder (issuer of debt) to pay a variable interest rate while receiving payment at the fixed interest rate on the debt from the swap counter party, this allows the debt holder to pay the debt investors the fixed interest rate payments due them, to designate the swap as a fair value hedge must determine the swaps fair value & the debts fair value at each reporting, special accounting is allowed for the fair value hedge, adjust the debt & swap contract to their fair value on the balance sheet & recognize any changes in fair value as unrealized gains & losses as income on the income statement, any gains & losses for the debt & swap contract should offset each other, the net effect on income (income statement) should equal zero, swap fair value & debt fair value are based on market appraisal value related to the change in the variable interest rate, cash settlement on the swap contract is the difference between the fixed rate debt payments receivable & variable rate (LIBOR) debt payments payable which equals the cash settlement, which increases or reduces the interest expense recognized on the debt instrument, if variable rate is less than the fixed rate the interest expense should be reduced & visa versa, detailed accounting by Allen Mursau
11 سال پیش
در تاریخ 1392/02/31 منتشر شده
است.
15,611
بـار بازدید شده