Mark to market To the accountants and CPA's out there, Is mark to market accounting really necessary when a company such as VET produces and markets the very same fungible product that is being hedged ?
It would seem that VET's position is no different than a producer selling on a fixed price contract.
My further question would be, if mark to market is not necessary, then why is VET doing it ? It seems to me that the resulting accounting provisions only add to investor's confusion. While I can fully see the need for mark to market in a company that is merely speculating on a futures position without producing the underlying commodity, this is clearly not the case here.
Two other thoughts, would mark to market apply if the hedge book was positive ?
I do not see other producers in Canada (or even the USA ) using mark to market , Could it be a requirement imposed by the Europeans ?
Any light that can be shed on the subject would be enormously useful IMHO