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Derivative asset on the date of purchase; usually a sub ledger of investments but could be broken out into a separate FSLI if material enough to state separately
So then the changes in FV would flow through P&L, and then once executed, terminated or expired it should be a realized gain or realized loss?
Depends. Is it a designated hedge? If not, default accounting for derivatives is mark to market. If the trade were designated, amortization over systematic and rational approach. If it is not, immediate P&L recognition. Expense it.
The premium should not be capitalized. Any mark to market instruments would book any off market or initial premium components to the P&L immediately. The offset is the derivative asset.