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What is the loss or gain on purchase commitment on december

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On November 17, 2018, Bautista Airways entered into a non-cancelable commitment to purchase 3,000 barrels of aviation fuel for ?9,000,000 on March 31, 2019. Bautista entered into this purchase commitment to protect itself against the volatility in the aviation fuel market. By December 31, 2018, the purchase price of aviation fuel had fallen to ?2,200 per barrel. However, by March 31, 2019, when Bautista took delivery of the 3,000 barrels, the price of aviation fuel had risen to ?3,100 per barrel.

Question 1. What is the loss/gain on purchase commitment on December 31, 2018.

Question 2. What is the gain/loss on purchase commitment on March 31, 2019.

Reference no: EM132497986

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