QUESTION 41 For each of the following situations indicate the proper disclosure of the company's financial statements. In the space provided provide one of the following answers: Record as a Liability Disclose in the footnotes Not recorded nor disclosed A company is sued because their product probably caused bodily injury to 100's of customers. Legal counsel has provided a reasonable estimate of the loss. O Record as a liability O Neither record or disclose

QUESTION 41 For each of the following situations indicate the proper disclosure of the company's financial statements. In the space provided provide one of the following answers: Record as a Liability Disclose in the footnotes Not recorded nor disclosed A company is sued because their product probably caused bodily injury to 100's of customers. Legal counsel has provided a reasonable estimate of the loss. O Record as a liability O Neither record or disclose

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 1 For each of the following scenarios, indicate whether in your opinion it is a violation of the HKICPA Code of Ethics. Specifically, for each scenario, choose one of the following options: (1) not likely to be a violation; (2) likely to be aviolation; or (3)clearly a violation. For each scenario, clearly explain your reasoning. 1.→Tong and Tong CPAS recently completed the audit of the Michaels Corporation and- issued an unqualified opinion on the financial statements. Subsequent to the issuance of the financial statem ents and auditor'sreport, the Securities and Futures Commission: (SFC) initiated an investigation into possible illegal acts engaged in by Michaels Corporation, andhas requesteda copy of all the auditing documentation prepared by: Tong and Tong. Michaels Corporation has contacted Tong and Tong and threatenedto: take legal action against the audit firm if the auditors provide the auditing documentation to the SFC. Michaelsmaintains that the information is…
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Q#3: How is accidental loss of goods treated in final account in case: • Goods had not been insured or Goods have been insured and the insurance company has claims associated with it.
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16-In the context of documentation of the audit procedures performed and audit evidence obtained the ISA 230 says "Audit documentation is not a substitute for the entity's accounting records". Which one of the following statements is appropriately describing the documentation of the audit procedures performed and audit evidence obtained? a. None of the options correctly describe the statement b. Audit documentation is not required when accounting records are available c. Accounting records are not required when audit documentations are available d. Both accounting records and audit documentations are essential
True or False 6. Entities may apply a simplified approach when recognizing impairment losses on trade receivables7. When there is a significant increase in the credit risk of a financial asset since its initial recognition but there is no objective evidence of impairment, interest revenue is computed on the net carrying amount of the financial asset (i.e. gross carrying amount less loss allowance)8. an entity recognizes impairment gain when there is an improvement in the credit quality of a previously impaired financial asset9.According to IFRS 9, expected credit losses are weighted average of credit losses with the respective risks of a default occurring as the weights10. a financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occured
b) IAS 32 makes it clear that the following items are not financial instruments.i. Physical assets, eg inventories, property, plant and equipment, leased assets and intangible assets (patents, trademarks etc)Page 7 of 7ii. Prepaid expenses, deferred revenue and most warranty obligationsiii. Liabilities or assets that are not contractual in nature (Deferred revenue, warranty obligationsRequiredWrite a Memo to your CEO, Mr Francis Tagoe explaining with reasons why the items listed above do not qualify as financial instruments. c) Your managing director, Mr Nicholas Adoboe-Mensah is not convinced why your company should give something back to the society, Explain with examples to him in a form of a memo the links between corporate performance, and corporate social responsibility.d) Global Reporting Initiatives structures key performance indicators according to a hierarchy category, aspect and indicator. Indicators are grouped in terms of the three dimensions of the conventional definition…
Under what condition should a pending lawsuit be recognized as a liability on a company's balance sheet? Multiple Choice The outcome is probable and can be reasonably estimated. The amount can reasonably estimated. The outcome is probable. The outcome is reasonably possible.
Star Company has a contingent liability that has a likelihood of actual occurrence that is classified as probable. Also, the amount of the liability can be reasonably estimated. Under these circumstances, Star is required to Multiple Choice O recognize a liability only. disclose but not recognize the liability or the expense. recognize a liability and an expense in its financial statements. recognize an expense only.
Question 13 According to ISA (UK) 580, Written Representations which TWO of the following must auditors obtain written representations about? A That the financial statements record and reflect all transactions B Material matters where other evidence is missing due to an emergency such as a fire or theft C The company's ability to continue as a going concern D Material uncertainties such as provisions where evidence is hard to obtain
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