Record a forward contract on the contract date on the balance sheet from the seller's perspective. On the liability side of the equation, you would credit the Asset Obligation for the spot rate. Then, on the asset side of the equation, you would debit the Asset Receivable for the forward rate.
A forward contract is a special type of derivative, and just like any other derivative, the value of a forward contract is tied to its underlying asset. Common forward contract assets include commodities and currencies, but even indexes and stocks can be underlying assets for these contracts.
In recording a forward exchange contract intended for trading or speculation purposes, the premium or discount on the contract is ignored and at each balance sheet date, the value of the contract is marked to its current market value and the gain or loss on the contract is recognised.
Equity Contract means a contract which is valued on the basis of the value of underlying equities or equity indices and includes related derivative contracts.
The forwards vs. futures distinction lies in their trading methods, as forwards are traded over the counter while futures are traded on an exchange. Futures contracts are traded on exchanges and are standardized and regulated.
Forward Contracts can broadly be classified as 'Fixed Date Forward Contracts' and 'Option Forward Contracts'. In Fixed Date Forward Contracts, the buying/selling of foreign exchange takes place at a specified future date i.e. a fixed maturity date.