Question: At December 31, 2019, Ashley plc has outstanding purchase commitments for purchase of 150,000 gallons, at 6.20 per gallon, of a raw material to be

At December 31, 2019, Ashley plc has outstanding purchase commitments for purchase of 150,000 gallons, at £6.20 per gallon, of a raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or net realizable value, whichever is lower. Assuming that the market price as of December 31, 2019, is £5.90, how would you treat this situation in the accounts?

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