A company enters into a forward contract to buy 1,000 units of a commodity at $50 per unit in 6 months. The current market price is $52 per unit.

Requirements:(a) Determine the value of the forward contract at inception. (b) Calculate the gain or loss if the market price is $48 per unit at settlement. (c) Prepare the journal entries for the forward contract. (d) Discuss the accounting treatment of derivative instruments.