Disclosure and presentation

 20X2 
$’000 
20X1 
$’000 
Less than 1 year 
30 
20 
1
2 years 
250 
170 
2
3 years 
250 
170 
3
4 years 
300 
80 
4
5 years 
180 
– 
1,010 
440 
Forward Exchange Contracts 
The passenger rail system is being substantially upgraded. New rolling stock is being 
purchased from Country A and Country B. In order to protect against exchange rate 
movements, the entity has entered into forward exchange contracts to purchase 
Foreign Currency A (FCA) and Foreign Currency B (FCB). 
The contracts are timed to mature when major shipments of rolling stock are 
scheduled to arrive and cover anticipated purchases for the ensuing financial year. 
At the reporting date, the details of outstanding contracts are: 
Buy FC
A
 
Sell 
Domestic 
Currency 
Average exchange rate 
20X2
$’000 
20X1 
$’000 
20X2 
20X1 
Maturity 
 
 
0
6 months 
2,840 
3,566 
0.7042 
0.7010 
6
12 months 
4,152 
1,466 
0.7225 
0.6820 
Buy FC
B
 
Sell 
Domestic 
Currency 
Average exchange rate 
20X2 
$’000 
20X1 
$’000 
20X2 
20X1 
Maturity 
 
 
0
6 months 
4,527 
2,319 
0.6627 
0.6467 
6
12 months 
– 
1,262 
– 
0.6337 
As these contracts are hedging anticipated future purchases, any unrealized gains and 
losses on the contracts, together with the cost of the contracts, are deferred and will 

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FINANCIAL INSTRUMENTS: DISCLOSURE AND PRESENTATION 
IPSAS 15 ILLUSTRATIVE EXAMPLES 
442
be recognized in the measurement of the underlying transaction. Included in the 
amounts deferred are any gains and losses on hedging contracts terminated prior to 
maturity where the related hedged transaction is still expected to occur. 
(ii) Credit Risk Exposures
The credit risk on financial assets of the entity which have been recognized on the 
statement of financial position, other than investments in shares, is generally the 
carrying amount, net of any provisions for doubtful debts. 
Bills of exchange and zero coupon bonds which have been purchased at a discount to 
face value, are carried on the statement of financial position at an amount less than 
the amount realizable at maturity. The total credit risk exposure of the entity could 
also be considered to include the difference between the carrying amount and the 
realizable amount. 
The recognized financial assets of the consolidated entity include amounts receivable 
arising from unrealized gains on derivative financial instruments. For off-balance-
sheet financial instruments, including derivatives, which are deliverable, credit risk 
also arises from the potential failure of counterparties to meet their obligations under 
the respective contracts at maturity. A material exposure arises from forward 
exchange contracts and the consolidated entity is exposed to loss in the event that 
counterparties fail to deliver the contracted amount. At the reporting date the 
following amounts are receivable (domestic currency equivalents):