IAS 39 - Commodity Hedges
Implication of IAS 39 on hedging certain forecasted raw material needs
Appendix 3 (Provided by Nestle)
Summary
1. IAS 39 needs to be clarified in respect to the accounting treatment of futures contracts used to reduce the price volatility of purchasing food-related raw materials. Such transactions should be treated as cash flow hedges, with fair value variation recorded in equity until final delivery. Another interpretation of IAS 39 could result that these instruments are recorded as trading positions, thereby affecting the P&L.
RE: JWG PROPOSALS FOR ACCOUNTING FOR FINANCIAL INSTRUMENTS
Thank you for giving us the opportunity to comment on your consultation paper. We have canvassed opinion amongst our members who have expressed a number of concerns on the effectiveness and usefulness of fair value accounting, particularly in its application to a class as wide-ranging as financial instruments. Our comments relate to the application of fair value accounting to corporates, not financial services organisations.
The Basel Committee on Banking Supervision has received more than 250 comments on its January 2001 proposals to revise fundamentally the 1988 Capital Accord, and intends to thoroughly review and consider all comments received. At this stage, the Committee wishes to highlight several important decisions that it has taken with respect to the proposals.
Glorious June June is the month which gets my vote for best month of the year – summer should be on its way and there is a host of important things to be getting on with: Test matches, a one-day
