In November 2020 you entered into four May 2021 long futures contracts for crude oil (1,000 barrels per contract) for $65.00 per barrel. If the futures price was $70.00 per barrel on December 31, 2020 and $72.00 per barrel on April 9, 2021 when you closed out your position, calculate:

a) The accounting profit in 2020 and 2021 if the contract is not a hedge

b) The accounting profit in 2020 and 2021 if the contract is a hedge

Answer rating: 100% (QA)

a If the contract is not a hedge Accounting profit in 2020 Futures price on December 31 2020 7000 pe... View the full answer