During the 1990's, Golden Inc

question 29

Essay

During the 1990's, Golden Inc. entered into long-term contracts with corporate customers to supply one million ounces of ore for $100 an ounce over the next 5 years. During the following years, the price of ore increased to $175 an ounce, which Golden Inc., because it did not hedge the price, would have to pay in order to meet its sales contracts. Although Golden Inc.'s auditor argued that a $75 million loss and liability should be recognized, Golden Inc. stated that the amount of the loss cannot be reasonably estimated prior to the results of renegotiations it was conducting with its corporate customers. Golden Inc. expected to renegotiate an increase in the initial contract price of $100 or reduce the amount of ounces to be delivered under the long-term sales contract. Defend a position of how the long-term contract should be treated from an accounting perspective.

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Definitions:

Autonomous Child

A child who is encouraged to make their own decisions and develop their independence and self-reliance.

Power

The capacity or ability to direct or influence the behavior of others or the course of events.

Control

Control refers to the power to influence or direct people's behavior or the course of events, or in scientific experiments, the standard conditions under which tests are made.

Exploration

The act of investigating, examining, or trying out new areas, ideas, or activities to gain knowledge or experience.