A - MC 10 - Stu (Answer)
A - MC 10 - Stu (Answer)
A - MC 10 - Stu (Answer)
QUESTION 1
A.
(a) A restructuring is a program that is planned and controlled by management and
materially changes either (1) the scope of a business undertaken by the company; or (2)
the manner in which that business is conducted√
(b) 2 conditions:
- management must have detailed formal plan for the restructuring;
- raise a valid expectation to those affected by implementation or announcement of the plan.
(c) restructuring costs:
Employee termination costs RM800,000
Onerous contract provision RM240,000
Break lease contract RM430,000
Restructuring costs RM1,470,000
B.
20Y1:
Present obligation as a result of a past obligating event—On the basis of the evidence
available when the financial statements were approved, there is no obligation as a result of
past events.
Conclusion—No provision is recognized. The matter is disclosed as a contingent liability
unless the probability of any outflow is regarded as remote.
20Y2:
Present obligation as a result of a past obligating event—On the basis of the evidence
available, there is a present obligation. The obligating event is the sale of the product to the
customer. An outflow of resources embodying economic benefits in settlement―Probable.
Conclusion—A provision is recognized at the best estimate of the amount to settle the
obligation at 31 December 20X2, and the expense is recognised in profit or loss. It is not a
correction of an error in 20Y1 because, on the basis of the evidence available when the 20Y1
financial statements were approved, a provision should not have been recognised at that time.
1
QUESTION 2
Cash 112,000
Premium Expense 140,000
Inventory of premiums 252,000
QUESTION 3
31 December 2017:
Computation: