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?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter5: Introduction To Business Expenses

Section: Chapter Questions

Problem 63P

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