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Sunday 30 August 2015

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Long-term prepayments in inventory supply contracts

IAS 2 Inventories Long-term prepayments in inventory supply contracts

 Tentative agenda decision

Issues related to the application of IAS 2

The IFRS Interpretations Committee (the ‘Interpretations Committee’) received a request seeking clarification on the accounting for long-term supply contracts of raw materials when the purchaser of the raw materials agrees to make significant prepayments to the supplier. The question is whether the purchaser should accrete interest on long-term prepayments by recognising interest income, resulting in an increase in the cost of inventories and, ultimately, the cost of sales.

Project stages


The tentative agenda decision will be out for public comment until 28 September 2015

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