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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