On 5 July, Blue Pty Ltd, a major customer of Greenfield Ltd, was placed into liquidation. As Blue Pty Ltd had confirmed the balance due to Greenfield Ltd as at balance date, management of Greenfield Ltd has refused to write off or provide for the Blue Pty Ltd account in the 30 June 2019 financial report. However, they are prepared to disclose this information as a note to the financial report.
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On 5 July, Blue Pty Ltd, a major customer of Greenfield Ltd, was placed into liquidation.
As Blue Pty Ltd had confirmed the balance due to Greenfield Ltd as at balance date,
management of Greenfield Ltd has refused to write off or provide for the Blue Pty Ltd
account in the 30 June 2019 financial report. However, they are prepared to disclose this
information as a note to the financial report.
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- The following selected circumstances relate to pending lawsuits for Erismus, Incorporated Erismus’s fiscal year ends on December 31. Financial statements are issued in March 2025. Erismus prepares its financial statements according to U.S. GAAP. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $1,430,000. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $2,830,000 to $5,660,000, with any damage in that range equally likely. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court.…Sid Berhad year end is 31 December 2020. The accountant of Sid Berhad has asked for your opinion on the accounting treatment of the following items: (i) On 18 February 2021, before the financial statements were authorised for issue, it was found that one of the customers, owing RM28,000 at 31 December 2020, had been declared bankrupt. Required: Advise Sid Berhad’s accountant on the accounting treatments for all the above- mentioned items. Your answer shall make reference to relevant MFRS Standards.d. Yompab Ltd is a listed manufacturing company which prepares its financial statements for the year ended 31 October, 2018 in accordance with IFRS. The financial statements aredue to be authorized for issue on 15 January 2019.i. Yompab Ltd holds an investment in the shares of a listed company, Nanoni Ltd. During November 2018 there was a material fall in the value of Nanoni Ltd’s shares. Analystsattribute the fall in value principally to a fraud dating back to December 2017 that was discovered by Nanoni Ltd's management and announced publicly in November 2018.ii. In December 2018, the directors of Yompab Ltd publicly announced a plan to reducethe workforce by 10% as a result of worsening economic conditions.Required:Discuss the effects of each of the above items on the financial statements of Ypmpab Ltd for theyear ended 31 October 2018 in accordance with IAS 10 Events after the Reporting Period.e. After a wedding in 2018, ten people died, possibly as a result of food poisoning…
- Choose the correct. Which of the following is not a liability that has priority in a liquidation?a. Administrative expenses incurred during the liquidation.b. Salary payable of $1,250 per person owed to 26 employees.c. Payroll taxes due to the federal government.d. Advertising expense incurred before the company became insolvent but not recorded until after the order of relief.Sunshine Limited, in preparation of its December 31, 2020, financial statements, is attempting to determine theproper accounting treatment for each of the following situations.1. As a result of uninsured accidents during the year, personal injury suits for $350,000 and $60,000 have beenfiled against the company. It is the judgement of Sunshine’s legal counsel that an unfavourable outcome isunlikely in the $60,000 case but that an unfavourable verdict approximating $250,000 will probably result in the$350,000 case.2. Sunshine Limited owns a subsidiary in a foreign country that has a book value of $5,725,000 and an estimatedfair value of $9,500,000. The foreign government has communicated to Sunshine its intention to expropriate theassets and business of all foreign investors. On the basis of settlements other firms have received from this samecountry, it is virtually certain that Sunshine will receive 40% of the fair value of its properties as final settlement.3. Sunshine’s chemical…Which of the following is not a liability that has priority in a liquidation?a. Administrative expenses incurred during the liquidation.b. Salary payable of $1,250 per person owed to 26 employees.c. Payroll taxes due to the federal government.d. Advertising expense incurred before the company became insolvent but not recorded until after the order of relief.
- Polska SA, in preparation of its December 31, 2019, financial statements, is attempting todetermine the proper accounting treatment for each of the following situations.1. As a result of uninsured accidents during the year, personal injury suits for €350,000 and €60,000have been filed against the company. It is the judgment of Polska's legal counsel that an unfavorableoutcome is unlikely in the €60,000 case but that an unfavorable verdict approximating €250,000 willprobably result in the €350,000 case.2. Polska Corporation owns a subsidiary in a foreign country that has a book value of €5,725,000 andan estimated fair value of €9,500,000. The foreign government has communicated to Polska itsintention to expropriate the assets and business of all foreign investors. On the basis of settlementsother firms have received from this same country, it is virtually certain that Polska will receive 40%of the fair value of its properties as final settlement.3. Polska's chemical product division…The XR Company’s Financial Year Ended on December 31, 2021. However, before the completion of the audit in February 2023 it was determined the company lost a case that was at court before the end of the financial year, but the outcome was uncertain. The auditor will disclosed this information as: a. An unusual occurrence b. A tax liability for the company c. A subsequent event. d. An annual expenseAfter the end of the reporting period, prior to authorizing for issue the financial statementsof Chubby the Piggy Ltd for the year ended 31 March 20X7 the following issues were raised:1. The notification of the bankruptcy of a customer: The balance of trade receivablesdue from the customer at 31 March 20X7 was $23,000 and at the date of thenotification it was $25,000. No payment is expected from the bankruptcyproceedings.2. Sales of some items of product ChoCoCo were made at a price of $5,40 each in Apriland May 20X7. Sales staff receives a commission of 15% of the sales price on theseproducts. At 31 March 20X7 the company had 12,000 units of this product ininventory included at cost of $6 each.3. The company is being sued by an employee who lost a limb in an accident while atwork on March 15 20X7. The company is contesting the claim as the employee wasnot following the safety procedures that he had been instructed to follow.Accordingly the financial statements include a note of a…
- Xing Fu ltd., in preparation of its December 31, 2019, financial statements, is attempting to determine the proper accounting treatment for each of the following situations.1. As a result of uninsured accidents during the year, personal injury suits for €175,000 and €50,000 have been filed against the company. It is the judgment of Xing Fu's legal counsel that an unfavorable outcome is unlikely in the €50,000 case but that an unfavorable verdict approximating €150,000 will probably result in the €175,000 case.2. Xing Fu owns a subsidiary in a foreign country that has a book value of €6,500,000 and an estimated fair value of €10,000,000. The foreign government has communicated to Xing Fu its intention to expropriate the assets and business of all foreign investors. On the basis of settlements other firms have received from this same country, it is virtually certain that Xing Fu will receive 50% of the fair value of its properties as final settlement.3. Xing Fu operates profitably from a…The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus’s fiscal year ends onDecember 31. Financial statements are issued in March 2019. Erismus prepares its financial statements accordingto U.S. GAAP.Required:Indicate the amount of asset or liability that Erismus would record, and explain your answer.1. Erismus is defending against a lawsuit. Erismus’s management believes the company has a slightly worse than50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $1,000,000.2. Erismus is defending against a lawsuit. Erismus’s management believes it is probable that the company willlose in court. If it loses, management believes that damages could fall anywhere in the range of $2,000,000 to$4,000,000, with any damage in that range equally likely.3. Erismus is defending against a lawsuit. Erismus’s management believes it is probable that the company willlose in court. If it loses, management believes that damages will…Yompab Ltd is a listed manufacturing company which prepares its financial statements for the year ended 31 October, 2018 in accordance with IFRS. The financial statements are due to be authorized for issue on 15 January 2019.i. Yompab Ltd holds an investment in the shares of a listed company, Nanoni Ltd. During November 2018 there was a material fall in the value of Nanoni Ltd’s shares. Analysts attribute the fall in value principally to a fraud dating back to December 2017 that was discovered by Nanoni Ltd's management and announced publicly in November 2018.ii. In December 2018, the directors of Yompab Ltd publicly announced a plan to reduce the workforce by 10% as a result of worsening economic conditions.Required:Discuss the effects of each of the above items on the financial statements of Ypmpab Ltd for the year ended 31 October 2018 in accordance with IAS 10 Events after the Reporting Period.
