Energy trading is a large global business with billions in notional amount traded among the producers, users of the products, and speculators. Several common commodities make up the energy market such as: coal, gasoline, heating oil, natural gas, crude oil, ethanol, and electricity. Most energy commodities are traded on an exchange using futures contracts or using futures contracts with options.
HedgeStar provides hedge accounting services to entities of all types that utilize the commodities markets to hedge risks. For FASB reporting entities that hedge commodities, HedgeStar provides hedge accounting analytics to measure hedge effectiveness and provides supporting documentation that is required by auditors. HedgeStar also provides on-going analysis and journal entries for hedge accounting clients.
Fair Value Measurements
HedgeStar calculates the fair value as defined under ASC 820 of all types of commodity contracts, including futures, forwards, options, and swaps. To measure fair value, HedgeStar uses methodologies that are vetted and accepted by auditors. Our valuation methods use observable market data in combination with proprietary pricing models to arrive at risk-adjusted fair values as required under ASC 820. HedgeStar analyzes the underlying instrument to verify its asset classification and to decide which methodology is best suited for accurately determining the exit price of each commodity contract.
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- Accounting Standards Update for Hedge Accounting – A Cargill and HedgeStar Q&A
- Summary of the new Accounting Standard Update as it relates to Hedge Accounting, and what it means for commodity hedge accounting.
- Summary of the new Accounting Standard Update relating to hedge accounting. What financial institutions need to know.