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1) On January 1, 2020, Blossom Ltd. entered into a purchase commitment contract to buy 10,500 oranges from a local company at a price of $0.40 per orange any time during the next year. The contract provides Blossom with the option either to take delivery of the oranges at any time over the next year, or to settle the contract on a net basis for the difference between the agreed-upon price of $0.40 per orange and the market price per orange for any oranges that have not been delivered. As at January 31, 2020, Blossom Ltd. did not take delivery of any oranges, and the market price for an orange was $0.37.

a) Assuming that Blossom Ltd. follows IFRS, how should Blossom Ltd. account for this purchase agreement if it fully intends to take delivery of all 10,500 oranges over the next year? Prepare any required journal entries at January 1 and January 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
January 1	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
January 31

b)

b)

Assuming that Blossom Ltd. follows IFRS, how should Blossom Ltd. account for this purchase agreement if it did not intend to take delivery of the oranges? Prepare any required journal entries at January 1 and January 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
January 1	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
January 31

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