Oil & Gas
Oil Price Hedge — Swap Contract Fair Value
Revaluing an oil price swap used to protect against falling crude prices.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Derivative Asset / Liability (Oil Hedge) | Asset (+) | 2,000,000.00 | - |
| Cash Flow Hedge Reserve (OCI) | Equity (+) | - | 2,000,000.00 |
💡 Accountant's Note
When a company hedges its oil production revenue using swaps, the derivative is marked to market monthly. For an effective cash flow hedge, the gain/loss goes to OCI and is recycled to the P&L when the hedged production is sold.
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