Valid from 07/04/2005
34(1)Paragraph 17B of Schedule 26 to FA 2002 (derivative contracts: amounts recognised in determining company's profit or loss) is amended as follows.U.K.
(2)In sub-paragraph (1)(a) after “profit and loss account” insert “ or income statement ”.
(3)For sub-paragraph (2) substitute—
“(2)An amount that in accordance with generally accepted accounting practice is shown as a prior period adjustment in any such statement as is mentioned in sub-paragraph (1) shall be brought into account for the purposes of this Schedule in computing the company's profits and losses for the period to which the statement relates.
This does not apply to an amount recognised for accounting purposes by way of correction of a fundamental error.”.
35U.K.After paragraph 25 of Schedule 26 to FA 2002 (debits and credits treated as relating to capital expenditure) insert—
25AWhere in accordance with generally accepted accounting practice a debit or credit for a period in respect of a derivative contract of a company—
(a)is recognised in equity or shareholders' funds, and
(b)is not recognised in any of the statements mentioned in section 85B(1),
the debit or credit shall be brought into account for that period for the purposes of this Chapter in the same way as a debit or credit that, in accordance with generally accepted accounting practice, is brought into account in determining the company's profit or loss for that period.”.
36U.K.In paragraphs 38(1) and (3) and 38A(1) and (3) of Schedule 26 to FA 2002, as inserted by Schedule 10 to FA 2004, for “creditor relationship” substitute “ derivative contract ”. These amendments shall be deemed always to have had effect.
37U.K.In paragraph 54 of Schedule 26 to FA 2002 (derivative contracts: general interpretation), after sub-paragraph (2) (meaning of “exchange gains or losses”) insert—
“(2A)In a case where fair value accounting is used the valuation referred to in sub-paragraph (2) is the valuation that would be given by an amortised cost basis of accounting.”.