Assume MGRM was required to use lower-of-cost-or-market accounting. Answer either Questions 5
or 6, but this time, show the profit-and-loss effects under the given conditions.
What will be an ideal response?
Using lower-of-cost-or-market accounting, MGRM's profits or losses (in Questions 5
and 6) would have been affected in the same way as its cash flows were affected. Namely, profits or losses on the mountain of maturing futures contracts would have been recognized immediately, but only the few maturing forward contracts would have been recognized at the same time. Profits, therefore, would have been dominated by the mountain of futures contracts.
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Fill in the blanks with correct word
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A. 130% B. 77% C. 43% D. 42%
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A) $368 B) $687 C) $494 D) $548
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