How to record cash collateral for derivatives
Records the movement of cash posted as collateral (margin) to a counterparty or clearing house for derivative contracts.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash Collateral Paid | Asset | 12,000.00 | - |
| Cash at Bank | Asset | - | 12,000.00 |
💡 Accountant's Note
Cash collateral is not derecognized from the balance sheet; it is reclassified as a restricted receivable because the entity retains the right to the return of the cash.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a separate G/L account for 'Restricted Cash - Derivative Margin'.
⚠️ Audit Flags
Reconciliation differences between broker statements and internal collateral accounts.
📄 Required Documentation
Credit Support Annex (CSA) and daily margin call notices.
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