Derivative Financial Instruments

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....ency etc. Example - Derivatives such as Options, Interest Rate Swaps, Currency Swaps and Futures & Forwards. Following condition should be satisfied to be classified as Derivative: * Its value changes in response to change in underlying assets. * It requires no initial or very less investment than it would be required otherwise to enter into contract in normal course. * It is settled at fu....

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....lue of the right and obligation is not zero, the contract is recognised as an asset or liability * At each Balance Sheet Date - Difference between price of underlying asset on Contract Date & Balance Sheet Date to be recognise. If Field rate is also given, then consider Present Value of above amount as Fair Value. Journal Entries * On Commitment Date - Generally, No entry as Fair Value is Z....