Fresh Produce Ltd. entered into a purchase commitment contract to buy apples from Farmers Corp.; however, the contract stipulates that Fresh Produce Ltd. can settle the contact on a net basis. Fresh Produce Ltd. intends to take delivery of the apples so that they can be sold in its grocery stores. How should this be accounted for in Fresh Produce Ltd.’s financial statements if it applies IFRS? Explain which financial risks the transaction exposes the entity to.
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