Acme Refinery buys a call on oil for $10,000.At the end of the accounting period, the price of oil has fallen and the value of the call has decreased to $6,000.Acme uses derivative accounting to account for the call.

(a)What accounting entry does Acme make for the purchase of the call for $10,000?

(b)What accounting entry does Acme make at the end of the accounting period when the value of the call has decreased to $6,000?

(c)Discuss a common exception to derivative accounting used in the upstream oil and gas business.