Thought provoking Financial Instruments UK GAAP practical use monthly Treasury

@Ampz said:
I was after some advice regarding FRS102 in relation to financial instruments derivatives. If that’s ok?
We currently operate in £ $ and € – no subsidiaries
Due to the company’s policies I revalue (re translate) the AR & AP & Banks to the £ closing rate at the end of every month, as you would at year end.
The makea in fx and changing new business opportunities I now have to use hedging to reduce the exposure.

Should I revalue the hedge at the end of each month, to mirror the revaluations to be in line with AP & AR translations? I am guessing they should be recognised at Fair Value at the end of the month as opposed to the closing rate until the transaction is complete, then the effectiveness of the instrument can judged?

example – 3 month hedging contract, purchase in $ and sell in Zlotys, revalue end of month one & revalue the brought forward value in month 2 etc any gain or loss would be separately identifiable and transferred to the p&l

So i would recognise the movement in Fair value at the end of each month until transactions has taken place using the bank to verify the Fair value rate for the remainder of the contract

Should the customer not pay within contract terms, will i be able to roll fx contract forward or would i have to satisfy the contract and get a new one in place?

Thank you to any one who has the time to respond, it is much appreciated

Colleague;

Your company financial statements is prepared on a single currency and, this is what is important.

IAS21 – foreign currency dictates how ALL what you’re enquiring about must be treated, and to help you appreciate the principle – read the specific standard(s). It’s easy to post the answer for you , but I learn better when I see the answer for myself and therefore encourages you to take a glance at the standards.

I hope you’re motivated and up for the work you’ve created for yourself and team members. When you find the errors – Please do a general journal to correct ALL errors, take note and instruct you subornates the correct procedures.

There are some very delicate points in this mail and would like to pin point this with you; but you may drop me a private mail in the mail section and I’ll address ALL to your response ONLY. It’s good question and your desire to learn is an excellent indicator – sharing information to develop competency.

Regards,