Page 445 - SBR Integrated Workbook STUDENT S18-J19

Answers

Example 14

Cash flow hedge

The inventories are recorded at $12 million:

Dr Inventories $12m

Cr Cash $12m

At the reporting date, the futures contract is revalued to fair value. Most of the
gain is recorded in other comprehensive income. The excess gain on the
futures contract of $0.1 million ($1m – $0.9m) is recorded in profit or loss.

Dr Derivative $1.0m

Cr OCI $0.9m

Cr P/L $0.1m

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