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Compiling assets during slug compilation on heroku cedar stack with rails 3.1

Trying to deploy a rails 3.1 app to heroku, I got the following error during slug compilation:

path/to/image.png isn’t precompiled

Precompiling assets failed, enabling runtime asset compilation

Turns out it is a rails 3.1.0 bug and upgrading rails to 3.1.1 (3.1.1.rc1 as of the time of this writing) solves the problem.

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