A company must account for income from financial arrangements on an accrual basis. Financial arrangements include government stock, futures contracts and deferred property settlements, excluding short-term agreements for sale and purchase of property. Changes to the rules for the treatment of financial arrangements have split the rules into two sets. Generally, the first set applies to financial arrangements entered into before 20 May 1999 and the second applies to financial arrangements entered into on or after that date.
Both sets of rules require the income or expenditure to be spread over the term of the financial arrangement.
This applies in every case—the company doesn’t have to be in the business of buying or selling financial arrangements, or be intending to sell, as it would with shares. The company may, in certain cases, deduct any losses.