Guidance Note on Accounting for Derivative Contracts (Issued 2015) – (12-05-2015). Hi Friends ICAI Issued Guidance Note on Accounting for Derivative Contracts Check Complete News from Below.
Introduction
1. In the year 2007, the Institute of Chartered Accountants of India (ICAI), issued Accounting Standard (AS) 30, Financial Instruments: Recognition and Measurement and Accounting Standard (AS) 31, Financial Instruments: Presentation. Both of these Accounting Standards were to come into effect in respect of accounting periods commencing on or after April 1, 2009 and were to be recommendatory in nature for an initial period of two years. These were to become mandatory in respect of accounting periods commencing on or after April 1, 2011. Further, it was clarified, that from the date of AS 30 becoming recommendatory in nature, the following Guidance Notes on Accounting, issued by the ICAI, stood withdrawn:
- (i) Guidance Note on Guarantees & Counter Guarantees Given by the Companies
- (ii) Guidance Note on Accounting for Investments in the Financial Statements of Mutual Funds
- (iii) Guidance Note on Accounting for Securitisation
- (iv) Guidance Note on Accounting for Equity Index and Equity Stock Futures and Options.
2. In March 2008, the ICAI issued an announcement that in case of derivatives, if an entity does not follow AS 30, keeping in view the principle of prudence as enunciated in Accounting Standard (AS) 1, Disclosure of Accounting Policies, the entity is required to provide for losses in respect of all outstanding derivative contracts at the balance sheet date by marking them to market. This announcement was applicable to financial statements for the period ending March 31, 2008, or thereafter. In case of forward contracts to which Accounting Standard (AS) 11, The Effects of Changes in Foreign Exchange Rates (revised 2003) applies the entity needs to fully comply with the requirements of AS 11.
3. Subsequently, in the year 2008, Accounting Standard (AS) 32, Financial Instruments: Disclosures, was issued by the ICAI, which was also recommendatory initially and was to become mandatory in respect of accounting periods commencing on or after April 1, 2011.
