During 2019, the Mitt Co. signed a non-cancellable contract to purchase 2,000 units of a raw material at P 32 per pound. On December 31, 2019, the market price of the raw material is P 26 per unit, and the selling price of the finished product is expected to decline accordingly. The financial statement prepared for 2019 should report a. A loss of P 12,000 in the statement of comprehensive income. b. An appropriation of retained earnings for P 12,000. c. Nothing regarding this matter. d. A note describing the expected loss on the purchase commitment.
During 2019, the Mitt Co. signed a non-cancellable contract to purchase 2,000 units of a raw material at P 32 per pound. On December 31, 2019, the market price of the raw material is P 26 per unit, and the selling price of the finished product is expected to decline accordingly. The financial statement prepared for 2019 should report a. A loss of P 12,000 in the statement of comprehensive income. b. An appropriation of retained earnings for P 12,000. c. Nothing regarding this matter. d. A note describing the expected loss on the purchase commitment.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 6P
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During 2019, the Mitt Co. signed a non-cancellable contract to purchase 2,000 units of a raw material at P 32 per pound. On December 31, 2019, the market price of the raw material is P 26 per unit, and the selling price of the finished product is expected to decline accordingly.
The financial statement prepared for 2019 should report
The financial statement prepared for 2019 should report
a. A loss of P 12,000 in the statement of comprehensive income.
b. An appropriation of retained earnings for P 12,000.
c. Nothing regarding this matter.
d. A note describing the expected loss on the purchase commitment.
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