CERTYNEX IFRS ACADEMY

Ulmière buys spare parts, payable 110,000 in 24 months; the supplier's price for settlement on normal credit terms is 100,000. The deferral effectively contains a financing element. Ulmière recognises the inventory at 110,000. What is the error?

The inventory should have been recognised at 100,000, the difference of 10,000 being interest expense spread over the period of the financing.

No error: the costs of purchase equal the total amount actually paid to the supplier.

The inventory should have been recognised at 100,000, and the difference of 10,000 expensed in full at the purchase date, since it does not pay for the parts.

The inventory should have been recognised at 99,000, after a 10% markdown for deferred payment.