Which of the following statements concerning purchase commitments is true?
A)Canadian practice requires disclosure of all purchase commitments.
B)Only anticipated losses require disclosure.
C)Footnote disclosure is required if the contract has a material effect on the financial statements.
D)Anticipated gains are recognized, if permanent and material.

Question

Quizplus · Accepted Answer

According to accounting standards (IAS 37), footnote disclosure is required for purchase commitments if the contract has a material effect on the financial statements. Anticipated gains are not recognized, but anticipated losses are recognized and disclosed. While Canadian practice may require disclosure of all purchase commitments, this is not a general rule in accounting standards.

Which of the Following Statements Concerning Purchase Commitments Is True