A company enters into a forward contract to buy 1,000 units of a commodity at...
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Accounting
A company enters into a forward contract to buy 1,000 units of a commodity at $50 per unit in 6 months. The current market price is $52 per unit.
Requirements:(a) Determine the value of the forward contract at inception. (b) Calculate the gain or loss if the market price is $48 per unit at settlement. (c) Prepare the journal entries for the forward contract. (d) Discuss the accounting treatment of derivative instruments.
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