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, 2016, the raw materials to be purchased in 2017 have a market price of $950,000.
(a) Prepare any necessary December 31, 2016 entry.
(b) In 2017, 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 (a) compares with the accounting treatment for private companies under ASPE.