CERTYNEX IFRS ACADEMY

Cobalt SA, a cable manufacturer, enters into a contract to buy 500 tonnes of copper for delivery in six months at a fixed price. The contract could be settled net in cash, but Cobalt entered into it and holds it for its expected usage requirements in its production (case facts). Which conclusion is consistent with the rule on contracts for non-financial items?

The contract is within IAS 32, since it can be settled net in cash, whatever Cobalt's intentions.

The contract is outside IAS 32, because it is held for Cobalt's expected usage requirements.

The contract is within IAS 32, since copper trades in an active market where a reference price exists.

The contract is outside IAS 32, because a non-financial item cannot give rise to a financial instrument.