Question: On October 15, 2021, Cody Co. entered into a commitment to purchase 200,000 units of raw material A for P8,000,000 on February 14, 2022. Cody

On October 15, 2021, Cody Co. entered into a commitment to purchase 200,000 units of raw material A for P8,000,000 on February 14, 2022. Cody entered into this purchase commitment to protect itself against the volatility in the price of raw material A. By December 31, 2021, the purchase price of material A had fallen to P36 per unit. However, by February 14, 2022, when Cody took delivery of the 200,000 units, the price of the material had risen to P41 per unit. How much will be recognized as gain on purchase commitment on February 14, 2022?

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