Aurora Gold Company produced 500,000 ounces of gold in 2012. Average sales price was S850/oz. The price was $820/oz at the start of the year and S850/oz at the end of the year. Production cost averaged $280/oz, which has been stable for several years. Aurora Gold had 30,000 ounces in inventory at the beginning of the year, and 10,000 ounces at the end of the year.
Required:
a. Compute Aurora Gold€™s revenue, costs of goods sold, and gross profit assuming the company recognizes revenue at the point of sale/delivery.

b. Determine the amount that should be shown as ending inventory on Aurora€™s balance sheet for 2012.
c. During the audit of the 2012 fiscal year, the auditors learned that Aurora had hedged the sales price for all its production in the year. In other words, the price for all of the 2012 production was guaranteed to be S850/oz. As a result, the auditors determined that it would be more appropriate for the company to recognize revenue when production was complete. For 2011, Aurora Gold had not engaged in hedging of the price on its production.
Based on these facts, select the type of accounting change on the left and the type of treatment on the right.

Based on this additional information, determine the effect on the financial statements relative to the method used in (a) and (b) above. Ignore the effect of income taxes.

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2011 2012 Revenue Cost of goods sold Gross profit S400,000,000 140.000.000 260,000,000 This is a: correction of am error .. reguiring: prospective treatment change in aircumstance/estimate retrospectrve treatment 2011 2012 Direction Direction Amount(Amount Revenue Cost of goods sold Gross profit Assets Retained earnings