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Under Schedule III, the company has committed to several capital purchases of property, plant and equipment. Individually, each is immaterial, but the TOTAL is material. The Schedule III requires disclosure of:
AOnly individual commitments above the 10% materiality threshold
BOnly the upcoming year's commitments
CThe aggregate amount as CAPITAL COMMITMENTS — material commitments must be disclosed even when individual items are not
DNothing — Schedule III does not require capital-commitment disclosure
Answer & Solution
Correct answer: C. The aggregate amount as CAPITAL COMMITMENTS — material commitments must be disclosed even when individual items are not
Materiality is assessed in AGGREGATE. Individually-immaterial items that collectively become material trigger disclosure. Capital commitments are a Schedule III disclosure requirement on the face of the balance sheet (or in notes), particularly when material to the company's financial position.
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