we have bought future contract for Silver @ 100 kg.now we have to pay 10 lacs for margin.but for get rid from daily mark to margin payment hurdle we have paid 15 lacs margin.so please : 1) Suggest accounting treatment for this margin 2) what about daily mark to margin I have gone through with Guidence note but have little bit confused with mark to margin a/c.in my opinion in this case there is no need to open mark to market margin a/c because we already laid lumpsum amount for this.pl suggest???
03 October 2011
In such business, margin money is obtained as a security for performance of contract. If there is a loss and the said amount is not paid by you then the amount of margin is utilised for the arrears. You can show margin money under Deposits with proper title as Margin Money.
Querist :
Anonymous
Querist :
Anonymous
(Querist)
03 October 2011
you mean there is no need to account for daily mark to margin !
05 October 2011
Sometimes, the Client may deposit a lumpsum amount with the Clearing/Trading Member in respect of margin money instead of paying/receiving margin money on daily basis. The amount so paid is in the nature of a deposit and should be debited to an appropriate account, say, 'Deposit for Margin Money Account'. The amount of initial margin received into/paid from such account should be debited/credited to the 'Deposit for Margin Money Account' with a corresponding credit/debit to the 'Initial Margin - Equity Derivative Instruments Account'. At the year-end, any balance in the 'Deposit for Margin Money Account' should be shown as a deposit under the head 'Current Assets'.
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