At the end of the fiscal year, Apha Airlines has an outstanding non-cancellable purchase commitment for...

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At the end of the fiscal year, Apha Airlines has an outstanding non-cancellable purchase commitment for the purchase of 1 mil

business accounting

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Answer 1

Answer #1

Purchase cost of Fuel is $ 4.10 per gallon

Market price of fuel is $ 4.50 per gallon

Inventory will be valued at lower of cost or market value of inventor

Lower is purchase cost of fuel that is $ 4.10. so we can take this value for valuation of inventory at end of year and there is no change in purchase price of fuel and closing inventory.

As per above explanation,

Answer = Option 1 = No impact

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Answer 2

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At the end of the fiscal year, Apha Airlines has an outstanding non-cancellable purchase commitment for...

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