On November 17, 2020, GGG Airways entered in to a commitment to purchase 3,000 barrels of aviation fuel for P9,000,000 on March 23, 2021. GGG entered into this purchase commitment to protect itself against the volatility in the aviation fuel market. By December 31, 2020, the purchase price of aviation fuel had fallen to P2,200 per barrel. However, by March 23, 2021, when GGG took delivery of the 3,000 barrels, the price of aviation fuel had risen to P2,500 per barrel. How much should be recognized as loss on purchase commitment on December 31, 2020?

On November 17, 2020, GGG Airways entered in to a commitment to purchase 3,000 barrels of aviation fuel for P9,000,000 on March 23, 2021. GGG entered into this purchase commitment to protect itself against the volatility in the aviation fuel market. By December 31, 2020, the purchase price of aviation fuel had fallen to P2,200 per barrel. However, by March 23, 2021, when GGG took delivery of the 3,000 barrels, the price of aviation fuel had risen to P2,500 per barrel. How much should be recognized as loss on purchase commitment on December 31, 2020?

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

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 3MC: During 2019, R Corp., a manufacturer of chocolate candies, contracted to purchase 100,000 pounds of...

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On November 17, 2020, Thailand Airways entered in to a commitment to purchase 3,000barrels of aviation fuel for P9,000,000 on March 23, 2021. Thailand Airways entered into thispurchase commitment to protect itself against the volatility in the aviation fuel market.By December 31, 2020, the purchase price of aviation fuel had fallen to P2,200 perbarrel. However, by March 23, 2021, when Thailand Airways took delivery of the 3,000 barrels, the price of aviation fuel had risen to P2,500 per barrel. How much should be recognized asloss on purchase commitment on December 31, 2020? The answer is 2,400,000. Please help me find the solutions. Thank you.
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On November 15, 2021, Marsyl Company entered into a commitment to purchase 100,000 barrels ofaviation fuel for P55 per barrel on March 31, 2022. The company entered into this purchasecommitment to protect itself against the volatility in the aviation fuel market. By December 31, 2021,the purchase price of aviation fuel had fallen to P50 per barrel. However, by March 31, 2022, whenthe company took delivery of the 100,000 barrels, the price of the aviation fuel had risen to P58 perbarrel. How much should be recognized as gain on purchase commitment for the year 2021?
On November 15, 2021, Marsyl Company entered into a commitment to purchase 100,000 barrels ofaviation fuel for P55 per barrel on March 31, 2022. The company entered into this purchasecommitment to protect itself against the volatility in the aviation fuel market. By December 31, 2021,the purchase price of aviation fuel had fallen to P50 per barrel. However, by March 31, 2022, whenthe company took delivery of the 100,000 barrels, the price of the aviation fuel had risen to P58 perbarrel. How much should be recognized as gain on purchase commitment for the year 2021? The following information has been extracted from the records of Marie Company about one of itsproducts: Units Unit Cost Total CostJan. 1 Beg. balance 10,000 150 P1,500,000Jan. 5 Purchase 10,000…
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On September 1, 2021, Laguna Grill determined that it will need to purchase 100,000 kilos of tuna fish on January 31, 2022. Because of the volatile fluctuation in the price of tuna fish, on September 1, 2021, the entity negotiated a forward contract with a reputable financial institution for the entity to purchase 100,000 kilos of tuna fish on January 31, 2022, at a price of P8,000,000 or P80 per kilo. The forward contract is designated as a cash flow hedge. The market price of tuna fish per kilo is P78 on December 31, 2021, and P75 on January 31, 2022. Required: Prepare journal entries for 2021 and 2022. agavtay Company is a golf course developer that constructs approximately 5 courses each year. On July 1, 2021, the entity has agreed to buy 5,000 trees on March 1, 2022 to be planted in the courses it intends to build. To protect itself from the variability of the market price of trees, the entity entered into a forward contract with a reputable bank. The price is set at P1,500…