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  3. b) on 1 july 2021, excel ltd acquired 80,000 kg of

b) On 1 July 2021, Excel Ltd acquired 80,000 kg of commodity Z which it...

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Accounting

b) On 1 July 2021, Excel Ltd acquired 80,000 kg of commodity Z which it held in its inventory. This cost $ 200 per kg, so a total of $ 16 million. Excel Ltd was concerned that the price of this inventory would fall, so on 1 July 2021 it sold 80,000 kg in the futures market for $ 205 per kg for delivery on 30 June 2022. On 1 July 2021 the conditions for hedge accounting, as per NZ IAS 39 were all met. At 31 December 2021, the end of Excel Ltds reporting period, the fair value of the inventory was $ 230 per kg while the futures price for 30 June 2022 delivery was $ 240 per kg. On 30 June 2022, Excel Ltd sold the inventory and closed out the futures position at the then spot price of $ 250 per kg. Required: Show all the accounting entries in respect of the above transactions (journal entries for all transactions) and the (T-account of the financial liability only)

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