Oil & Gas
Oil Price Collar — Fair Value Movement
Revaluing the oil price collar at month-end as oil prices move.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Derivative Asset (Collar Fair Value Change) | Asset (+) | 1,200,000.00 | - |
| Cash Flow Hedge Reserve (OCI) | Equity (+) | - | 1,200,000.00 |
💡 Accountant's Note
As oil prices fall, the put option gains value, protecting revenue. For an effective cash flow hedge, the gain is recorded in OCI and recycled to revenue when the hedged production is sold — offsetting the lower oil price received.
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