Contingent Assets

FR – Nov 2019 – L2 – Q4b – Provisions, Contingent Liabilities and Contingent Assets (IAS 37)

Distinguish between provisions, contingent liabilities, and contingent assets as defined in IAS 37.

Question

IAS 37 – Provisions, Contingent Liabilities and Contingent Assets, sets out the principles of accounting for these items and classifies when provisions should not be made prior to its issue. The inappropriate use of provisions has been an area where companies have been accused of manipulating financial statements and of creative accounting.

Required:

Distinguish between provisions, contingent liabilities, and contingent assets as contained in IAS 37.
(14 Marks)

Required:

Distinguish between provisions, contingent liabilities, and contingent assets as contained in IAS 37.
(14 Marks)

Answer

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Tags: Contingent Assets, Contingent Liabilities, IAS 37, Provisions
Level: Level 2

Topic: Contingent Liabilities and Contingent Assets (IAS 37)
Series: NOV 2019

FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

Question

The definition of a liability forms an important element of the International Accounting
Standards Board’s Framework for the Preparation and Presentation of Financial Statements
which, in turn, forms the basis for IAS 37: Provisions, Contingent Liabilities and Contingent
Assets.

Required

Define liability and describe the circumstances under which provisions should be recognized.

Answer

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Tags: Contingent Assets, Contingent Liabilities, Financial Reporting, IAS 37, IFRS Standards, Provisions
Level: Level 2

Topic: IAS 37: Provisions, Contingent Liabilities and Contingent Assets
Series: DEC 2022

FR – May 2017 – L2 – Q2a – Financial Reporting Standards and Their Applications

Discuss how to account for the cost of site reclamation and the financial effects of an earthquake.

Question

Akakpo Ltd obtained a license free of charge from the government to dig and operate a gold mine. Akakpo Ltd spent GH¢6 million digging and preparing the mine for operation and erecting buildings on site. The mine commenced operations on 1 September 2014. The license requires that at the end of the mine’s useful life of 20 years, the site must be reclaimed, all buildings and equipment must be removed, and the site landscaped. At 31 August 2015, Akakpo Ltd estimated that the cost in 19 years’ time of the removal and landscaping would be GH¢5 million, and its present value is GH¢3 million.

On 31 October 2015, there was a massive earthquake in the area, and Akakpo Ltd’s mine shaft was badly damaged. It is estimated that the mine will be closed for at least six months and will cost GH¢1 million to repair.

Required:

i) Demonstrate how Akakpo Ltd should record the cost of the site reclamation as at 31 August 2015 in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
(3 marks)

ii) Explain how Akakpo Ltd should treat the effects of the earthquake in its financial statements for the year ended 31 August 2015 in accordance with IAS 10 Events after the Reporting Period.
(2 marks)

Answer

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Tags: Contingent Assets, Contingent Liabilities, Earthquake, Events after the Reporting Period, IAS 10, IAS 37, Provisions, Reclamation
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAY 2017

AAA – May 2017 – L3 – Q1 – Planning | Audit evidence | Evaluation and review

Assess the audit implications of subsequent events involving bad debt and legal actions, describe subsequent events review, and recommend audit procedures for identifying material subsequent events.

Question

You are the audit manager in charge of the audit of Serwah Ghanaba Ltd for the year ended 31 December 2014. The partner in charge of the audit instructs you to carry out a review of the company’s activities during the financial year end. The following issues came up during the review.

i) On 28 February 2015, Jessica Mensah, who owed the company GH¢500,000.00, was killed by some robbers on her way to Accra after a visit to her hometown. The amount was part of the GH¢800,000.00 debtors appearing on the statement of financial position for the year end 31 December 2014. It was realized that it will not be possible to recover the amount from the family of Jessica Mensah.

ii) In another development, the marketing director of the Company, Stephen Odoi, who was due to retire on 31 March 2015, embarked on a 6-month leave prior to retirement with effect from 1 October 2014. Investigation instituted in May 2015 revealed that Mr. Stephen Odoi took a contract appointment with another company from 1 November 2014. As a result of the investigation, the company decided to bring an action against Mr. Stephen Odoi to recover the salary paid to him from 1 November 2014 to 31 March 2015.

Required:

a) Assess the audit implications of issues (i) and (ii) above. (10 marks)

b) Describe the nature and purpose of subsequent events review. (5 marks)

c) Recommend the audit procedures which would be carried out in order to identify any material subsequent events. (5 marks)

Answer

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Tags: Audit Procedures, Bad Debt, Contingent Assets, Legal Issues, Subsequent Events
Level: Level 3

Topic: Audit evidence, Evaluation and review, Planning
Series: MAY 2017

FR – Nov 2019 – L2 – Q4b – Provisions, Contingent Liabilities and Contingent Assets (IAS 37)

Distinguish between provisions, contingent liabilities, and contingent assets as defined in IAS 37.

Question

Required:

Distinguish between provisions, contingent liabilities, and contingent assets as contained in IAS 37.
(14 Marks)

Required:

Distinguish between provisions, contingent liabilities, and contingent assets as contained in IAS 37.
(14 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contingent Assets, Contingent Liabilities, IAS 37, Provisions
Level: Level 2

Topic: Contingent Liabilities and Contingent Assets (IAS 37)
Series: NOV 2019

FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

Question

Required

Define liability and describe the circumstances under which provisions should be recognized.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contingent Assets, Contingent Liabilities, Financial Reporting, IAS 37, IFRS Standards, Provisions
Level: Level 2

Topic: IAS 37: Provisions, Contingent Liabilities and Contingent Assets
Series: DEC 2022

FR – May 2017 – L2 – Q2a – Financial Reporting Standards and Their Applications

Discuss how to account for the cost of site reclamation and the financial effects of an earthquake.

Question

Required:

i) Demonstrate how Akakpo Ltd should record the cost of the site reclamation as at 31 August 2015 in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
(3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contingent Assets, Contingent Liabilities, Earthquake, Events after the Reporting Period, IAS 10, IAS 37, Provisions, Reclamation
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAY 2017

AAA – May 2017 – L3 – Q1 – Planning | Audit evidence | Evaluation and review

Assess the audit implications of subsequent events involving bad debt and legal actions, describe subsequent events review, and recommend audit procedures for identifying material subsequent events.

Question

Required:

a) Assess the audit implications of issues (i) and (ii) above. (10 marks)

b) Describe the nature and purpose of subsequent events review. (5 marks)

c) Recommend the audit procedures which would be carried out in order to identify any material subsequent events. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Bad Debt, Contingent Assets, Legal Issues, Subsequent Events
Level: Level 3

Topic: Audit evidence, Evaluation and review, Planning
Series: MAY 2017

Question Tag: Contingent Assets

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FR – Nov 2019 – L2 – Q4b – Provisions, Contingent Liabilities and Contingent Assets (IAS 37)

Distinguish between provisions, contingent liabilities, and contingent assets as defined in IAS 37.

FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

FR – May 2017 – L2 – Q2a – Financial Reporting Standards and Their Applications

Discuss how to account for the cost of site reclamation and the financial effects of an earthquake.

AAA – May 2017 – L3 – Q1 – Planning | Audit evidence | Evaluation and review

Assess the audit implications of subsequent events involving bad debt and legal actions, describe subsequent events review, and recommend audit procedures for identifying material subsequent events.

FR – Nov 2019 – L2 – Q4b – Provisions, Contingent Liabilities and Contingent Assets (IAS 37)

Distinguish between provisions, contingent liabilities, and contingent assets as defined in IAS 37.

FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

FR – May 2017 – L2 – Q2a – Financial Reporting Standards and Their Applications

Discuss how to account for the cost of site reclamation and the financial effects of an earthquake.

AAA – May 2017 – L3 – Q1 – Planning | Audit evidence | Evaluation and review

Assess the audit implications of subsequent events involving bad debt and legal actions, describe subsequent events review, and recommend audit procedures for identifying material subsequent events.

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FR – Nov 2019 – L2 – Q4b – Provisions, Contingent Liabilities and Contingent Assets (IAS 37)

Distinguish between provisions, contingent liabilities, and contingent assets as defined in IAS 37.

You're reporting an error for "FR – Nov 2019 – L2 – Q4b – Provisions, Contingent Liabilities and Contingent Assets (IAS 37)"

FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

You're reporting an error for "FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions"

FR – May 2017 – L2 – Q2a – Financial Reporting Standards and Their Applications

Discuss how to account for the cost of site reclamation and the financial effects of an earthquake.

You're reporting an error for "FR – May 2017 – L2 – Q2a – Financial Reporting Standards and Their Applications"

AAA – May 2017 – L3 – Q1 – Planning | Audit evidence | Evaluation and review

Assess the audit implications of subsequent events involving bad debt and legal actions, describe subsequent events review, and recommend audit procedures for identifying material subsequent events.

You're reporting an error for "AAA – May 2017 – L3 – Q1 – Planning | Audit evidence | Evaluation and review"

FR – Nov 2019 – L2 – Q4b – Provisions, Contingent Liabilities and Contingent Assets (IAS 37)

Distinguish between provisions, contingent liabilities, and contingent assets as defined in IAS 37.

You're reporting an error for "FR – Nov 2019 – L2 – Q4b – Provisions, Contingent Liabilities and Contingent Assets (IAS 37)"

FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

You're reporting an error for "FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions"

FR – May 2017 – L2 – Q2a – Financial Reporting Standards and Their Applications

Discuss how to account for the cost of site reclamation and the financial effects of an earthquake.

You're reporting an error for "FR – May 2017 – L2 – Q2a – Financial Reporting Standards and Their Applications"

AAA – May 2017 – L3 – Q1 – Planning | Audit evidence | Evaluation and review

Assess the audit implications of subsequent events involving bad debt and legal actions, describe subsequent events review, and recommend audit procedures for identifying material subsequent events.

You're reporting an error for "AAA – May 2017 – L3 – Q1 – Planning | Audit evidence | Evaluation and review"

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