The Glass Co. has a firm commitment dated April 1 to purchase cocoa with delivery on June 15. The commitment is for 1,000 metric tons of cocoa at P700 per ton

The Glass Co. has a firm commitment dated April 1 to purchase cocoa with delivery on June 15. The commitment is for 1,000 metric tons of cocoa at P700 per ton. In order to hedge against decreases in the spot prices of cocoa, the company designated an option as a hedge against changes in the fair value of the commitment. The put option was acquired on April 1 for a premium of P1,000 and has strike price of P700 per ton. The option, has a notional amount of 1,000 tons and expiration date of June 15. Spot prices per ton and the value of the option at selected dates are as follows: April 1 April 30 May 31 June 15 Spot price per ton P701 P696 P697 P695 Fair value of option P1,000 P4,300 P3,500 P5,000 The change in the option’s time value will be excluded from an assessment of hedge effectiveness or split accounting is used. What is the gain or (loss) on firm commitment (hedged item) on May 31, gain or (loss) on option contract on May 31, gain or (loss) on firm commitment (hedged item) on June 15, and gain or loss on option contract on June 15, respectively?


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