How to record fair value hedge termination
Records the cessation of fair value hedge accounting and the subsequent treatment of the cumulative hedge adjustment.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Interest Income/Expense (Amortization) | Expense | 800.00 | - |
| Hedge Adjustment on Financial Asset | Asset | - | 800.00 |
💡 Accountant's Note
Once a fair value hedge is discontinued, the hedge adjustment made to the carrying amount of the hedged item is amortized to profit or loss over the remaining life of the instrument using the effective interest method.
Practitioner & Systems Framework
💻 ERP Architecture
The hedge accounting module must transition the 'hedge adjustment' component into the 'amortized cost' calculation engine.
⚠️ Audit Flags
Immediate write-off of the hedge adjustment to P&L instead of amortization.
📄 Required Documentation
Hedge discontinuation memo and revised EIR calculation schedule.
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