Under IFRs, liabilities related to non-cancellable purchase commitments are typically recognized
A) on the date the contract takes effect.
B) at the time of payment.
C) when the purchase is recorded in the accounting system.
D) in the period a decline in market price occurs.

Question

Quizplus · Accepted Answer

Under IFRS, liabilities related to non-cancellable purchase commitments are recognized when there is a decline in market price, making the purchase commitment onerous. This is because the entity is obligated to purchase at a higher price than the current market value, leading to a potential loss.

Under IFRs, Liabilities Related to Non-Cancellable Purchase Commitments Are Typically