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On April 1, 2020, an enterprise fund issued $2,000,000 in variable rate debt, with interest paid on March 31 of each year, the fiscal year-end. The rate is reset annually. The variable rate for fiscal 2021 is 3.5%. On the same date, the fund entered a receive variable/pay fixed interest rate swap, where the fund pays a 3.6% fixed rate to a counterparty. By the end of fiscal 2021, the variable rate fell to 3.3% and the swap declined in value by $8,000. The swap qualifies for hedge accounting, per SGAS 53.
-How is the enterprise fund's investment in derivatives reported on its statement of net position?

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The decline in the swap's value by $8,000 indicates a loss in value, making it a liability for the enterprise fund. Since the swap is used for hedging and qualifies for hedge accounting per SGAS 53, changes in its value are recognized in the financial statements. Therefore, it is reported as a liability.

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