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Accounting for Investments, Volume 2: Fixed Income Securities and Interest Rate Derivatives—A Practitioner's Guide by R. Venkata Subramani

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THE TRADE LIFE CYCLE FOR INTEREST RATE REVERSE COLLAR

  • Recording the trade—contingent
  • Account for the premium if any on the trade
  • Receive/pay the premium for the trade
  • Reset the interest rate for the ensuing period
  • Account for accrued interest if any on the valuation date
  • Reverse the accrued interest if any on the coupon date
  • Ascertain and account for the fair value on the valuation date
  • Pay/receive interest on the pay date
  • Termination of the trade and accounting for termination fee
  • Payment or receipt of termination fee
  • Maturity of the trade
  • Reversal of the contingent entry on termination or maturity
  • FX revaluation entries (for foreign currency trades)
  • FX translation entries (for foreign currency trades)

Since the entire events above are already explained, it is not elaborated here.

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