Beaver Corp., public company using IFRS, signed a long-term non-cancellable purchase commitment with a major supplier to purchase raw materials at an annual cost of $2 million. At December 31, 2013, the raw materials to be purchased in 2014 have a market price of $1,965,000.
(a) Prepare any necessary December 31, 2013 entry.
(b) In 2014, Beaver receives the raw materials and pays the required $2 million. The raw materials now have a market value of $1,915,000. Prepare the entry to record the purchase.
(c) Explain how the accounting treatment under (a) compares with the accounting treatment for private companies under ASPE.