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Futures contract

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Futures contract

  • This topic has 7 replies, 4 voices, and was last updated 11 years ago by MikeLittle.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • November 2, 2013 at 5:51 pm #144395
    missj15
    Member
    • Topics: 3
    • Replies: 8
    • ☆

    I am stuck with what to do with the following and would be grateful if someone could help

    Walker (who is a subsidiary of another company) entered into a futures contract during the year to hedge a forecast sale in the year ended 31 October 20×9. The futures contract was designated and documented as a cash flow hedge. At 31 October 20×8, had the forecast sale occurred, Walker would have suffered a loss of $1.9m and the futures contract was standing at a gain of $2m. No accounting entries have been made to record the futures contract.

    The question requirements are to prepare a consolidated statement of financial position as at 31 October 20×8. Please could anyone tell me how to treat this adjustment?

    Thank you

    November 10, 2013 at 1:02 pm #145292
    missj15
    Member
    • Topics: 3
    • Replies: 8
    • ☆

    @mikelittle

    Hi Mike, are you able to help with this query? I am still stuck a week after posting the question, thanks

    November 13, 2013 at 1:35 am #145757
    hasanali95
    Member
    • Topics: 239
    • Replies: 248
    • ☆☆☆

    I also want to know
    And Mike where do changes in cash flow hedges go?

    November 13, 2013 at 12:47 pm #145812
    elsie2009
    Member
    • Topics: 34
    • Replies: 61
    • ☆☆

    This is one of the workings from the BPP Course Exam 2?

    I took the approach that as it was a cash flow hedge that any gain/loss would be recognised in OCI, I think I took the net gain of $0.1m to the retained earnings working of the subsidiary – not sure if this is right though.

    November 13, 2013 at 5:45 pm #145868
    missj15
    Member
    • Topics: 3
    • Replies: 8
    • ☆

    Hi

    I asked my tutor about this at college and because it’s a cash flow hedge, the £2m is recognised as a financial asset, the £1.9m is put into reserves within OCI until the cash flow happens and the £0.1m is taken to the P/L account (via retained earnings)

    November 13, 2013 at 6:15 pm #145873
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23316
    • ☆☆☆☆☆

    Hi

    I’ve spent time trying to find the question – now not only do I discover that it’s a BPP mock exam answer but also that you’ve found the answer from your tutor at college.

    Can I presume that you’re question is now answered?

    November 13, 2013 at 6:34 pm #145876
    missj15
    Member
    • Topics: 3
    • Replies: 8
    • ☆

    Yes my question was in relation to one adjustment that was contained within my BPP course exam, are posts of that nature prohibited? I’m sorry if you feel I have wasted your time, I was not aware that my post was being looked at by you as no response had been received. I made the post when I was unable to speak to my college tutor but as it had not been answered I asked for help next time I attended college

    November 14, 2013 at 12:23 pm #145978
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23316
    • ☆☆☆☆☆

    Hi Miss J

    No problem at all. The only issue I had was that I didn’t recognise the question so couldn’t read the context in which the futures contract was located.

    But you’re welcome to post on the site anything you want (within reason!). I can’t speak for the other tutors on this site but I don’t have a full set of BPP, Kaplan, Emile Woolf, LSBF, ATC, nor any other provider’s material so references are always appreciated and will give me a chance of finding the source document.

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