CERTYNEX IFRS ACADEMY

Salvère has firmly committed to buy paper in 20X6; neither party has yet performed its obligations. The paper will be processed and resold at a positive margin. What is the treatment of the contract under IAS 37?

A provision for the whole firm purchase commitment for 20X6.

No treatment: an executory contract that is not onerous, outside the scope.

Disclosure of a contingent liability for the purchase commitment.

A provision equal to the margin expected on reselling the paper.