Global Standards for the world economy

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The Board asked the Committee to consider clarifying the purchaser's accounting for long-term supply contracts through an interpretation

 27 February 2012

The IFRS 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 prepayments to the supplier for the raw materials. The question is whether the purchaser should accrete interest on long-term prepayments by recognising interest income, resulting in an increase of the cost of inventories.

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