Why this is mistaken
A qualifying fair-value hedge generally recognizes the derivative's change and the offsetting change in the hedged item's carrying amount for the designated risk in earnings. OCI is not the automatic destination for all hedges. The correction uses separate rows for the instrument and hedged item, reports any net earnings effect, and preserves basis adjustments for later accounting.
Where to watch
When this mistake may appear
- All effective hedge changes belong in OCI.
Check your work
Your work may contain this mistake if:
- Records the derivative but omits the matching adjustment to the hedged item for the designated risk.