September/ December 2015 ( Question -3-b)

@P2-D2 said:
Hi,

What is it that you specifically do not understand?

Thanks

Sir,

From the answer of Q3(b), it states a few evidences that the contract is net settled but the last sentence:
” However, the contract will probably still qualify as ’own use’ as long as it has been entered into and continues to be held for the expected counterparties’ sales/usage requirements. Additionally, the entity has not irrevocably designated the contract as
measured at fair value through profit or loss, thus adding weight to the ’own use’ designation.”
which sounds to me like it should be treated as a normal purchase instead of a derivative…
does that mean an ‘own-use’ contract need to be treated as a normal purchase even if it can be settled net in cash?

also, can an ‘own-use’ contract that cannot be settled net in cash be irrevocably designated the contract as measured at fair value through profit or loss therefore being treated like a derivative?