River and Co. has entered into a non-cancellable purchase contract which the company to purchase 5,000 barrels of aviation fuel from Fuel and Gas Co. at P650 per barrel middle of 2002. By the end of 2002, the price per barrel increases to P670 and by the end of the first quarter of 2003, it rolls back to 630 a barrel when River and Co. made the actual purchase triggered from the continuing decline since 2003 commenced. 1. At the time of the actual purchase, how much shall the inventory be recorded at? 2. At year end, inventory shall be carried at?
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River and Co. has entered into a non-cancellable purchase contract which the company to purchase 5,000 barrels of aviation fuel from Fuel and Gas Co. at P650 per barrel middle of 2002. By the end of 2002, the price per barrel increases to P670 and by the end of the first quarter of 2003, it rolls back to 630 a barrel when River and Co. made the actual purchase triggered from the continuing decline since 2003 commenced.
1. At the time of the actual purchase, how much shall the inventory be recorded at?
2. At year end, inventory shall be carried at?
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