Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › September/ December 2015 ( Question -3-b)
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- November 8, 2017 at 8:27 pm #414912
Sir
Can you please explain me the sep/dec 2015 question 3 b, i am having trouble in understanding this part
I have read the examiner answer still i didn’t understand anything
November 12, 2017 at 9:51 am #415347Hi,
What is it that you specifically do not understand?
Thanks
May 1, 2018 at 11:32 am #449641@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?
May 4, 2018 at 10:01 pm #450138Hi,
The answer is saying that it isn’t treated under IFRS 9, so would not be treated as a derivative, as it is an ‘own-use’ contract.
If it is an ‘own-use’ contract then it won’t be a derivative, regardless of the settlement method.
Thanks
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