How to Record Interest Rate Swap Fair Value
Recording the mark-to-market adjustment for derivative instruments used to hedge interest rate risk.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Derivative Asset | Asset | 12,000.00 | - |
| Unrealized Gain on Derivatives | Other Comprehensive Income | - | 12,000.00 |
💡 Accountant's Note
REITs use swaps to convert variable rate debt to fixed. Effective portions of the change in fair value are typically recorded in Other Comprehensive Income (OCI).
Practitioner & Systems Framework
💻 ERP Architecture
Adjusted monthly based on valuation reports provided by the lending bank or a third-party valuation service.
⚠️ Audit Flags
Effectiveness testing results; valuation inputs (Level 2 or 3 hierarchy) for the derivative.
📄 Required Documentation
ISDA agreement, monthly bank valuation report, and hedge effectiveness analysis.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
Related Journal Entries
Real Estate Investment Trusts (REITs)
UPREIT Formation — Property Contributed for Operating Partnership Units (Tax-Deferred Exchange)
Real Estate Investment Trusts (REITs)
OP Unit Redemption — Cash Redemption or REIT Share Conversion at Fair Value
Real Estate Investment Trusts (REITs)
Straight-Line Rent — Recognizing Level Revenue Over Lease Term Despite Escalating Cash Rents
Discussion & Community Questions
Loading comments...