FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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QUESTION ONE [18] Isdaka Ltd is a manufacturer and distributor of mining equipment. One of the company 's competitors instituted legal action against Isdaka Ltd. Before year-end (30 June 2019), the company's legal representatives advised that, although losing the case was unlikely, legal fees and settlement costs could amount to R900 000 in the event that the court case was lost. On 12 March 2020, the judge presiding over the case ruled that Isdaka Limited should pay R1 000 000 to the plaintiff as well as pay all of the plaintiff' s legal fees, which amounted to R180 000. The financial statements had not yet been authorised for issue at the time of the court ruling. Required: Discuss how this information should be treated in the financial statements of Isdaka Ltd. Include all relevant definitions
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Transcribed Image Text:QUESTION ONE [18] Isdaka Ltd is a manufacturer and distributor of mining equipment. One of the company 's competitors instituted legal action against Isdaka Ltd. Before year-end (30 June 2019), the company's legal representatives advised that, although losing the case was unlikely, legal fees and settlement costs could amount to R900 000 in the event that the court case was lost. On 12 March 2020, the judge presiding over the case ruled that Isdaka Limited should pay R1 000 000 to the plaintiff as well as pay all of the plaintiff' s legal fees, which amounted to R180 000. The financial statements had not yet been authorised for issue at the time of the court ruling. Required: Discuss how this information should be treated in the financial statements of Isdaka Ltd. Include all relevant definitions
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