Dear All,
We have a requirement as follows:
In case of premature cancellation of a forward contract, the gain or loss on cancellation of contract has to be accrued and the entry has to be passed on a monthly basis, as a reversible entry, till the maturity date.
For example:
I have created a forward contract on 01.01.2013 for USD 100000 @ INR 50 with maturity date as 30.06.2013.
I want to cancel the forward contract on 31.03.2013. (My financial year closing is on 31.03.2013). Closing rate = INR 52
Hence, I do a premature settlement on 31.03.2013.
As per my understanding, when we make a premature settlement, two new transactions get created with transaction type 105 and 103.
103 will net off the original contract on the maturity date at the same rate i.e. reverse of original contract and 105 will be created with new rate (INR 52) and maturity date (31.03.2013).
I understand, I should run TBB1 and TPM18 for 105.
Should we run TBB1 for both the original contract and Netting on maturity date(30.06.2013)?
I am able to run TPM18 for original contract and record the realized loss of INR (2*100000) in our example on 30.06.2013.
Now for satisfying the above requirement of accruing the loss of INR 200000 till the maturity date (30.06.2013) what process should be followed? Can we run TPM1 for original contract? If yes, then the original contract will value the contract on the closing rate and not at the cancelled rate.
Can anyone please help me on what should be the process followed to achieve the requirement?
Thanks,
Kamal