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D1.815 Derivatives—accounting test

In order for a derivative contract to fall within the derivative contracts legislation it must¹:

1. Ìý

   •ÌýÌýÌýÌý be treated for accounting purposes as a derivative (see below)

2. Ìý

   •ÌýÌýÌýÌý be a contract that is not treated as a derivative financial instrument because it fails to meet the definition of a derivative in FRS 26, para 9(b)—note that the definition of a derivative that is contained in the successor standards to FRS 26 (which no longer apply for accounting periods beginning on or after 1 January 2015), namely IAS 39, which applies where a company adopts FRS 101, or FRS 102, is the same as that formerly contained in FRS 26 and that both these standards contain the same exclusion to that formerly contained in FRS 26 para 9(b)—(see below) and the contract for accounting purposes is, or forms part of, a financial asset or liability². This test is designed to catch prepaid forward contracts which otherwise might fall outside the derivative contracts legislation. Where a contract is brought within the