Oil & Gas
Oil Price Hedge — Settlement Received
Receiving a settlement payment when the hedge is settled and oil prices fell below the hedged price.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash in Bank (Hedge Settlement) | Asset (+) | 1,500,000.00 | - |
| Cash Flow Hedge Reserve (OCI Release) | Equity (-) | 1,500,000.00 | - |
| Oil Revenue (Hedge Gain Recycled) | Revenue (+) | - | 1,500,000.00 |
💡 Accountant's Note
At settlement, the hedge gain is recycled from OCI to the income statement to offset the lower oil revenue received. The net effect is that the company receives approximately the hedged price regardless of market movements.
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