ACCOUNTING TREATMENT AND DISCLOSURE SUGGESTION FOR CREDIT DEFAULT SWAP TRANSACTIONS – PSAK 71

Abstract

This research wants to propose journalizing method for credit default swap transaction. Indonesian new accounting standard for financial instruments, PSAK 71 does not explain about credit default swap’s journal entries. The lack of previous standards hinders banks, auditors and government to utilize credit default swaps in both hedging and speculative. This is a qualitative research using data of foreign banks for comparison. In the result, a new asset account is made to represent the amount of fees the credit default swap buyer has paid to the seller. This asset account’s recognition is using the concept from IASB asset definition. This research is limited only to journal entries for vanilla credit default swaps.