On 1 January 20X1, Nolvène buys an inventory of steel sheets. The supplier charges a price of 100,000 for settlement on normal credit terms; Nolvène obtains the right to pay 106,000 on 31 December 20X1. This deferral effectively contains a financing element. Compute the cost of the steel sheets and the interest expense to be recognised over the period of the financing.
- Purchase price for normal credit terms
- 100,000
- Amount paid on deferred terms
- 106,000