In this video on Accounting for Derivatives Comprehensive Guide, we will understand accounting for derivatives.




#1 Forward Contract

A forward contract is simply a two party contract to buy or sell an asset at a specified point in time at today's agreed price.

#2 Futures Contract

Futures contract happens on exchanges between buyers and sellers that act as a market place.

#3 Options Contract

An option is a contract that gives the buyer the right, but not the duty to purchase or sell an underlying asset or instrument at a defined strike price at a given date, depending on the option form.




Treasury shares (own shares) are subtracted from equity.




The transaction costs of an equity transaction are accounted for as a deduction from dividends, net of any tax benefit.

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