MGMT 120A Lecture Notes - Lecture 8: Equity Method, Current Liability, Income Statement
Document Summary
Training 3 part 4: chs 10 and 11 operational assets acquisition and disposition utilization and impairment. On 11/21, a company enters into a contract to purchase 100k barrels of oil at a barrel for delivery and payment on 1/30. On 12/31, the market price of the oil is a barrel and on 1/30 the price is a barrel. Prepare the journal entries on 12/31 and 1/30. We are recognizing that we are going to have to pay this extra money even though it is a loss. Dr merchandise inventory 2,300k (100k * 23) Special cases example: purchase land and building for 3 million- we need to know how to value each part of what you purchased (separate land from building) If you keep building- use the relative sales value method. So you might look at the old appraisal values to show you what % of the cost each should be. Dr building 750 (25% of 3 million)
