Derivitaves — OpenTuition Forums

SSukhdev9y ago

Hi I am unsure about the treatment for derivatives. There is a question that says it entered into a contract to purchase copper in 12 months for £100k. The cost of contract is nil. At yr end price of copper has risen and f.v of derivative is £15k. At yr end copper price falls and f.v is £5k. What is double entry to record asset? How should this be answered and I am unsure what is meant by derivative.

P2-D2Tutor9y ago#1

Hi, To understand derivatives then you should watch the lecture. The first increase we DR Derivative CR Profit or loss. The second is a reduction in the asset so DR Profit or loss CR Derivative Thanks

SSukhdev9y ago#2

Hi Can you please let me know which video this is in?

P2-D2Tutor9y ago#3

Er, the video that has derivatives in its title?

SSukhdev9y ago#4

Hi, really sorry but I have gone through each chapter heading and can't see one called derivatives?

P2-D2Tutor9y ago#5

Try looking in chapter 17 and the fifth video entitled 'Financial instruments - derivatives' Thanks

SSukhdev9y ago#6

Thanks finally found it.