S.D. Admin. R. 20:06:20:03

Current through Register Vol. 50, page 159, June 17, 2024

Section 20:06:20:03 - Accounting for transactions in financial futures contracts

Gains and losses for hedging transactions may be deferred for hedged items carried at amortized cost under the following accounting procedures:

(1) The initial cost and any subsequent cost of the hedging vehicle shall be carried in a deferred account until the hedge is completed or closed out;

(2) If the underlying transaction is completed, the hedge and the transaction shall be considered as one. In the case of an acquisition, the gain or loss on the hedge shall be amortized over the life of the security acquired. In the case of a disposition, the gain or loss on the hedge shall be combined with the gain or loss on the sale;

(3) If the hedge is closed out and the anticipated underlying transaction is canceled, the gain or loss from the hedge shall be treated as investment income or expense;

(4) Allocation of gains or losses to hedged items must be recorded under an accounting system pursuant to § 20:06:20:05.

Gains or losses on opening hedging transactions on assets or liabilities carried at market value must be recognized currently.

S.D. Admin. R. 20:06:20:03

13 SDR 75, effective 12/21/1986.

General Authority: SDCL 58-4-1, 58-27-7.

Law Implemented: SDCL 58-27-7.