On January 1, 20x1, ABC signed a 3-year, non-cancellable purchase contract which allows ABC to purchase up to 12,000 units of Buko annually from XYZ at P15 per unit and guarantees a minimum purchase of 3,000 units. At year-end, it was found out that the goods become unique in the market. ABC had 4,000 units of this inventory at December 31, 20x1, and believe these can be sold for P25 per unit. How much is the gain on purchase commitment to be recognized on December 31, 20x1?
On January 1, 20x1, ABC signed a 3-year, non-cancellable purchase contract which allows ABC to purchase up to 12,000 units of Buko annually from XYZ at P15 per unit and guarantees a minimum purchase of 3,000 units. At year-end, it was found out that the goods become unique in the market. ABC had 4,000 units of this inventory at December 31, 20x1, and believe these can be sold for P25 per unit. How much is the gain on purchase commitment to be recognized on December 31, 20x1?
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
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 3RE: Shaquille Corporation began the current year with inventory of 50,000. During the year, its...
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On January 1, 20x1, ABC signed a 3-year, non-cancellable purchase contract which allows ABC to purchase up to 12,000 units of Buko annually from XYZ at P15 per unit and guarantees a minimum purchase of 3,000 units. At year-end, it was found out that the goods become unique in the market. ABC had 4,000 units of this inventory at December 31, 20x1, and believe these can be sold for P25 per unit.
How much is the gain on purchase commitment to be recognized on December 31, 20x1?
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