CFM51010 - Derivative contracts: the matters and computational rules: position before changes made by F(2)A15

The following guidance relates to the position as it was before the amendments made by F(2)A15 and applies to company periods of account beginning before 1 January 2016.

Computational rules - where to find guidance relating to position before the F(2)A15 changes

This section of the guidance deals with the basic rules about how profits and losses on derivative contracts (including foreign exchange gains and losses) were computed and brought into account, before the changes made by F(2)A 2015.

This guidance does not cover the computational rules that applied in periods of account beginning before 1 January 2005 - see CFM84000 if you are looking at an earlier period.

The next section (CFM52000+) covers exceptions to the basic rule:

• situations in which it is mandatory to use fair value accounting (CFM52020),
• amounts released under a statutory insolvency arrangement (CFM52060),
• credits and debits that are capitalised in connection with fixed capital assets or projects (CFM52040),
• amounts that are recognised in equity or shareholders’ funds (CFM52050), and
• changes of accounting practice (CFM52030).

Chapters 3 and 4 of CTA09/Part 7 contain a number of other special computational rules. Guidance on the provisions concerned with certain embedded derivatives is at CFM52500 onwards, and derivatives held by partnerships are covered at CFM52700 onwards.