Net losses on firm purchase commitments to acquire goods for inventory result from a contract price that exceeds the current market price.

If a firm expects that losses will occur when the purchase occurs, expected losses, if material,

A. Should be recognized in the accounts and separately disclosed as losses on the income statement of the period during which the decline in price takes place.

B. Should be recognized in the accounts and separately disclosed as net unrealized losses on the balance sheet at the end of the period during whichthe decline in price takes place.

C. Should be recognized in the accounts and separately disclosed as net unrealized losses on the balance sheet at the end of the period during which the contract is executed.

D. Should not be recognized in the accounts until the contract is executed and need not be separately disclosed in the financial statements.