Banking

Interest Rate Swap — Fair Value Movement

Revaluing an interest rate swap used to convert fixed-rate loan income to floating.

Account NameTypeDebit ($)Credit ($)
Derivative Asset (IRS)Asset (+)120,000.00-
Fair Value Gain — IRS (P&L)Revenue (+)-120,000.00

💡 Accountant's Note

Banks use IRS to manage interest rate risk on their loan and deposit books. If used as a fair value hedge, the gain/loss goes to P&L along with the offsetting hedged item adjustment, minimizing net volatility.

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