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Hello Tutor,
Are futures contracts taken as financial asset whereas forward rate contracts aren’t..?
No difference between them.
Both have $nil value at inception and will be a FA or a FL at the SFP date.
Okay. But in Kaplan test your understanding 21, 22, in cashflow hedge accounting one is futures contract for gold and it is solved as Financial Liability recycled through P and L,
whereas in another question its a forward rate contract for buying a plant and its not taken as Financial asset/liability because its adjusted against the carrying value of the plant.I do not understand why they have different treatment?
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