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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.
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
Can you please let me know which video this is in?
Er, the video that has derivatives in its title?
Hi, really sorry but I have gone through each chapter heading and can’t see one called derivatives?
Try looking in chapter 17 and the fifth video entitled ‘Financial instruments – derivatives’
Thanks finally found it.