Question: Connect Ltd. entered into a contract for the future purchase of 500 tones of aluminum, at a price of $3,300 per tonne. The spot price

Connect Ltd. entered into a contract for the future purchase of 500 tones of aluminum, at a price of $3,300 per tonne. The spot price at year end was $2,950 per tonne. The metal will be used to manufacture small aircraft. As a result of the decline in the price of aluminum, the average sales price of the aircrafts was reduced to $21,000 per aircraft. The costs of other components and the associated manufacturing are $9,000 per aircraft. Manufacturing one aircraft uses 4 tonnes of aluminum.

What amount should Connect recognize as a provision for this contract? Assume that the time value of money element is immaterial and that Connect reports using the IFRS framework.

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