Velarde company purchases approximately 500000

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34. Velarde Company purchases approximately 500,000 bushels of oats each month. On December 1, 2014, Velarde purchased an option to purchase 500,000 bushels of oats on March 1, 2015, at a price of P100 per bushel, which is the market price of bushel on that date. Velarde had to pay P100,000 to purchase this oats call option, which it designated as a cash flow hedge against price increases for its March 2015 purchase of oats. On December 31, 2015, the price of oats is P95 per bushel. Because there is still time for the price of oats to potentially rise above P100 per bushel before the option expires, the option has a value of P40,000 on December 31, 2014. On March 1, 2015, the price of oats is P104. What is the gain on the call option to be recorded by Velarde in its 2015 statement of comprehensive income?
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