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ACCOUNTING FINANCIAL STATEMENTS FUTURES

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Theater_Cat
Super Contributor
Can anybody PLEASE give me a few names of proficient ACCOUNTANT/AUDITOR experts who know the CORRECT way to account for futures contracts trading turnover? My accountant does not seem to know - should we reflect turnover based on the UNDERLYING exposure of the share (e.g. sell 1 AMS contract at R8000 - should turnover read R8000 or R80000 (1 contract = 100 shares). I dont expect the forum to know the answer - just guide me to someone who does, since I cant be the only futures trader with this conundrum. Thanks.
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7 REPLIES 7
Stifler
Contributor
Hi, I am a financial manager at a financial institution and we recorded SSF trading at the amount invested i.e. the R8000, not your exposure of R80 000-Refer to IAS 18 revenue recognition.
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Stifler
Contributor
sorry for posting again, if you want help you can contact me on my email adress, can send it to you if you like.
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Not applicable
My two cents worth: Turnover should be the actual proceeds received from the sale of the futures contract. The cost of entering into it would then be deducted from this to reflect the profit/ loss on the respective futures trade.
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Not applicable
Well my Guess would be the ACTUAL MONEY TURNED OVER on your side, ie R8k. You did not put R80k into the trade (you might have had exposure to it but the physical money used was less). And the profit you take might be R5k not the R50k of expsoure to the underlying or am I wrong in this thinking? So turnover is only what you put into it IMO.

Its like saying I have R100k in my credit card facility and you only use R20k. Surely you dont pay back the account for the R100k?

Its like an argument I have with a realestate friend of mine. They sell 50 houss a year with a "turnover" of R60mil. He calims his "turnover"is R60mil.
The company commission is only R3.6mil before all expenses etc (other topic).
I tell him the "turnover" in his business is R3.6mil...he did not get the full R60mil into his account at any stage.
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doomsdayza
Super Contributor
you only recognise the margin and the movement there in. dr margin, cr cash. then any movement in margin goes through IS i.e. dr margin, cr P&L or vice versa.
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bangbul
Regular Contributor
Agree with GB turnover=sales.
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Theater_Cat
Super Contributor
Yes, please send contact email. I tend to agree - accounting rules state that it must always be "actual turnover recorded" i.e. the R8000 and not the "exposure" of R80000. Any other views?
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