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Cash Flow Hedge: Fuel/Commodity
Recording the change in fair value of a fuel price hedge contract (Derivative).
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Derivative Asset | Asset (+) | 2,000.00 | - |
| Cash Flow Hedge Reserve (OCI) | Equity (+) | - | 2,000.00 |
💡 Accountant's Note
Large logistics companies 'lock in' fuel prices. If the market price rises, the contract becomes more valuable. The gain is stored in 'Other Comprehensive Income' (OCI) until the fuel is actually bought.
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