Best Corp., a public company using IFRS, signed a long-term non-cancellable purchase commitment with a major supplier
Question:
Best Corp., a 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 $1 million. At December 31, 2019, the raw materials to be purchased in 2020 have a market price of $950,000.
a. Prepare any December 31, 2019 entry that is needed.
b. In 2020, Best receives the raw materials and pays the required $1 million. The raw materials now have a market value of $920,000. Prepare the entry to record the purchase.
c. Explain how the accounting treatment under part (a) compares with the accounting treatment for private companies under ASPE.
Step by Step Answer:
Intermediate Accounting Volume 1
ISBN: 978-1119496496
12th Canadian edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy