In FAS133 accounting for derivatives (not looking at SAP system) the difference between dissolution and de-designation is as I understood as follows:
In case of de-designation of the hedging relationship the open OCI balances stay I the balance / effective portions remain in the equity capital.
In case of dissolution of the hedging relationship the open OCI balances are posted to PL accounts.
How is in SAP de-designation and dissolution of the hedge relationship done? I understand the following:
In transaction THMEX there are 2 buttons: one to dedesignate the hedging relationship and one to dissolve the hedging relationship
For both processes the relationship between hedged item and hedging transaction is ended.
In TPM1 month end valuation when hedge accounting is set up in customizing there is a step in the valuation procedure for retrospective effectiveness assessment. TPM1 does not make changes in THMEX if a hedging relationship is found ineffective. If a hedging relationship is ineffective the total valuation result of the hedging instrument is posted to P&L accounts.
Transaction THM14 is for Hedging Relationship De-designation
In transaction THM52 “Retrospective Assessment: dissolve ineffective relationship” you end the hedging relationship selected and the system posts an FI document to reclassify the effective equity components / equity balances /OCI (Other Comprehensive Income) balances to P&L accounts.