CopMin Inc is a private enterprise that is involved in
CopMin Inc. is a private enterprise that is involved in copper mining operations. The company currently owns two operating mines. It is January 1, 2011, and CopMin has recently entered into two types of contracts. For its Papula Mine, it has entered into a sales contract with one of its major customers. As part of this contract, it has agreed to sell 75% of its annual production at a fixed price that increases 1% each year for inflation. The contract is for five years (until December 31, 2015) and cash will be received on delivery of the copper, which will be made on a monthly basis. For its second mine, Minera Mine, the company has purchased a variety of option contracts to sell copper that are exchange traded. The company has options on 60% of the mine's production for 2011 and 40% of the production for 2012. The company has the option to sell copper at a fixed price and all of the contracts can be settled on a net cash basis anytime before expiry. The company paid a fee to buy these option contracts at the time they were purchased.
(a) Explain how CopMin would record these two different contracts under IFRS and ASPE.
(b) How would your answer in part (a) change if the contract for the Papula Mine could be settled in net cash?
Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
Relevant Tutors available to help