How do we account for gains/losses on interest rate derivatives?

How do we account for gains/losses on interest rate derivatives?

Financial Derivative instruments are considered as off-balance sheet items and cash flows arising there from are recognized in the books of accounts as and when the settlements take place in accordance with the terms of the respective contracts over the tenor thereof. The gain/loss accrued on unsettled financial derivative instruments is taken to the Profit & Loss account on the reporting date. Gains/losses from derivative transactions are adjusted under the head, ’Interest Expenditure’, in the Profit & Loss account.

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