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Accounting periods beginning on or after 1 January 2016

For accounting periods beginning on or after 1 January 2016 any exchange movements that arise in respect of a derivative contract that are recognised in a company's accounts as an item of profit and loss are included in computing its accounting profits¹.

Any exchange gains or losses that arise as a result of the translation of the assets, liabilities, income and expenses of all or part of a company's business from the functional currency of the business, or that part of the business, into another currency are disregarded for the purposes of the derivative contracts legislation where such amounts are recognised in the company's accounts as an item of other comprehensive income².

Exchange movements arising as a result of the change to the functional currency of an investment company are also disregarded in computing the company's derivative contract profits. This exclusion does not apply, however, to any exchange movements arising as a result of a change in