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

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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