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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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LEARNING OBJECTIVES

After studying this chapter you will be able to get a grasp of the following:

  • Meaning of interest rate swaps
  • Meaning of receive fixed and pay floating type of interest rate swap
  • Definition of a derivative as per US GAAP and IFRS
  • Interest rate swap as a hedging instrument
  • Accounting for interest rate swaps
  • Interest rate swap instrument—receive fixed and pay floating
  • Trade life cycle of interest rate swaps
  • Accounting journal entries to be recorded during the different phases of the trade life cycle
  • Illustration of investments in interest rate swaps
  • Preparation of general ledger accounts
  • Preparation of income statement, balance sheet after the investments in interest rate swaps are made
  • FX revaluation and FX translation process
  • Functional currency, foreign currency and presentation currency

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