On December 31, 2013, Dos Company has outstanding purchase commitments for 50,000 gallons at P20 per gallon of raw material. It is determined that the market price of the raw material has declined to P17 per gallon on December 31, 2013 and it is expected to decline further to P15 in the first quarter of 2014. What is the loss on purchase commitment that should be recognized in 2013?
On December 31, 2013, Dos Company has outstanding purchase commitments for 50,000 gallons at P20 per gallon of raw material. It is determined that the market price of the raw material has declined to P17 per gallon on December 31, 2013 and it is expected to decline further to P15 in the first quarter of 2014. What is the loss on purchase commitment that should be recognized in 2013?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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