I have some queries on hedged accounting as follows:
1) after hedging relationship is established, at month-end, hedging
instrument and hedged item need to MTM.
The valuation with reset posting entries, for example cash flow hedge, should be as follows
Dr./Cr. Hedge reserve - cash flow 80
Dr./Cr. Unrealized FX gain (loss) on derivative 20
Cr./Dr. Derivative liability / asset 100
Dr./Cr. Hedged asset / liability 100
Cr./Dr. Hedge reserve - cash flow 80
Cr./Dr. Unrealized FX gain (loss) on derivative 20
and then reset it.
However system doesnot generate the valuation of hedged item.
Am I understood correctly? or SAP works this way (without valuation of hedged item).
2) Or I have to change PMP to handle gain/loss handling as "Hedging accounting (underlying transaction)" for the hedged item?
to have valuation of hedged item posted?
Please kindly advise.