Need for the guidance note on accounting for derivatives
What is the need for the guidance note on accounting for derivatives?
Currently, none of the notified accounting standards prescribe the proper accounting treatment for derivative contracts. Foreign exchange forward contracts, which are speculative in nature, ie, which do not hedge the payment of monetary asset or monetary liability, are within the scope of AS 11 and, as such, are not included within the scope of this guidance note. Even derivative contracts that are regulated by certain regulations specific to a particular sector or a specified group of entities are also not covered by the present guidance note.