Question
At December 31, 2020, Bramble Ltd. has outstanding non-cancellable purchase commitments for 36,100 litres of raw material at $2.20 per litre. The material will be
At December 31, 2020, Bramble Ltd. has outstanding non-cancellable purchase commitments for 36,100 litres of raw material at $2.20 per litre. The material will be used in Brambles manufacturing process, and the company prices its raw materials inventory at cost or NRV, whichever is lower.
Assuming that the market price as at December 31, 2020, is $1.70 per litre instead of $2.20, how would you treat this commitment in the accounts and statements? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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