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Wednesday 17 September 2014

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IFRS Interpretations Committee

IAS 2 Inventories Long-term prepayments in inventory supply contracts

 Interpretations Committee issues on hold

IAS 2 Inventories: Long-term prepayments in inventory supply contracts

The Interpretations Committee received a submission seeking clarification on the accounting for long-term supply contracts of raw materials when the purchaser of the raw materials agrees to make prepayments to the supplier. The question is whether the purchaser/supplier should accrete interest on long-term prepayments by recognising interest income/expense, resulting in an increase of the cost of inventories/revenue.

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Current stage: Work in progress