Are derivatives debt or equity?

Question

1.34K viewsInvestments

0

Guest60 0 Comments

Let’s say that I want to create a balance sheet and the company has derivatives, is it included in the liabilities or in the equity part?

1 Answer

score 0 · Answer 1 · 2013-04-14T23:31:22+00:00

Derivatives are definitely not equity. They can be either an asset or a liability. A derivative is a financial instruments whose value depends on an underlying asset. Depending on the contract you might end up holding an asset (for example if you have fixed the price of goods you will buy and this price is lower than the market price) or a liability.