Why this is mistaken
A derivative is generally measured at fair value at each reporting date, before cash settlement. The change must also reach the reporting destination required by the applicable model. The correction records the period-end asset or liability, reconciles opening to closing fair value, and separates measurement from presentation. Hedge designation can change where a change is reported; it does not remove the fair-value measurement.
Where to watch
When this mistake may appear
- Nothing is recorded until the derivative settles.
Check your work
Your work may contain this mistake if:
- Omits the period-end derivative asset or liability and the destination of its fair-value change.