At the End of the Fiscal Year, Apha Airlines Has

question 47

Multiple Choice

At the end of the fiscal year, Apha Airlines has an outstanding non-cancellable purchase commitment for the purchase of 1 million gallons of jet fuel at a price of €4.10 per gallon for delivery during the coming summer. The company prices its inventory at the LCNRV.
If the market price for jet fuel at the end of the year is €4.50, how would this situation be reflected in the annual financial statements?

• A) Record unrealized gains of €400,000 and disclose the existence of the purchase commitment.
• B) No impact.
• C) Record unrealized losses of €400,000 and disclose the existence of the purchase commitment.
• D) Disclose the existence of the purchase commitment.

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Definitions:

Teleology

The philosophical study of design and purpose in the natural world, or the explanation of phenomena by the purpose they serve rather than by postulated causes.

World View

The fundamental cognitive orientation of an individual or society encompassing the whole of the individual's or society's knowledge and point of view.

Afterlife

The afterlife is a concept referring to an existence or realm that individuals are believed to enter following physical death, varying significantly across different cultures and religions.

Flagging

The process of establishing when accommodations have been made to standardized assessments.