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Profits, gains and losses

This guidance applies to periods of account beginning before 1 January 2005

The accounts of the company may show, either in the profit and loss account or reserves

• credits representing amounts received or receivable by the company under or in connection with the contract, or increases in the value of the contract
• debits relating to amounts the company has or is liable to pay, or reductions in the value of the contract.

All of these are included in ‘profits, gains and losses�. But the legislation particularly distinguishes ‘charges and expenses�, paid under or in connection with the contract, so that it can describe more specifically what expenses are allowable. (See CFM84210 for amounts taken to or from reserves.)

FA02/SCH26/PARA15(3)(b) makes clear that forward premiums and discounts arising on a currency contract are included in the credits and debits to be brought into account.