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Profit or loss related to this forward contract

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On January 1, 2010, Entity N enters into a forward contract to purchase on January 1, 2012, a specified number of barrels of oil at a fixed price. Entity A is speculating that the price of oil will increase and plans to net settle the contract if the price increases. Entity N does not pay anything to enter into the forward contract on January 1, 2010. Entity N does not designate the forward contract as a hedging instrument. At the end of 2010, the fair value of the forward contract has increased to P400,000. At the end of 2011, the fair value of the forward contract has declined to P350,000. How much should be recognized in 2011 profit or loss related to this forward contract?

Reference no: EM132523908

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