Canseco Company has been having difficulty obtaining key raw materials for its manufacturing process. The company, therefore, signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on November 30, 2021, at an agreed price of $100,000. On December 31, 2021, the raw material had declined in price to $85,000. Required
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Canseco Company has been having difficulty obtaining key raw materials for its manufacturing process. The company, therefore, signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on November 30, 2021, at an agreed price of $100,000. On December 31, 2021, the raw material had declined in price to $85,000.
Required
What entry, if any, would you make on December 31, 2021, to recognize these facts?
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- On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?Marvin Gaye Company has been having difficulty obtaining key raw materials for its manufacturing process. The company therefore signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on November 30, 2020, at an agreed price of $400,000. At December 31, 2020, the raw material had declined in price to $365,000. Instructions What entry would you make on December 31, 2020, to recognize these facts?Mimi Company has been having difficulty obtaining necessary raw materials for its manufacturingprocess. The company, therefore, signed a long-term noncancelable purchase commitment with itslargest supplier of this raw material on Jun3 30, 2020, at an agreed price of P800,000. On December31, 2020, the raw material had declined in price to P720,000 1.Assuming that on March 31, 2021, Mimi Company purchases the raw materials. During thistime, the market price of the raw materials is P810,000? P780,000? P690,000?
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