Wilhelm Company prepares its financial statements according to International Accounting Standards (IFRS). It recently estimated that it has a 55 percent chance of losing a lawsuit. Assuming Wilhelm can reliably estimate the amount it would pay if it loses the lawsuit, it should. a. Accrue a liability for the lawsuit. b. Disclose the matter in the notes to the financial statements but not accrue a liability for the lawsuit. c. Make no mention of the lawsuit in the financial statements or notes. d. None of the above.

For each separate situation, indicate whether Cruz Company should (a) record a liability, (b) disclose in notes, or (c) have no disclosure.

The audit team is preparing to conduct its 2020 audit for ABC Company LLC. However, the audit team has not received its audit fees from ABC Company for its 2019 audit. The audit team might be tempted to issue a favorable report so that the company is able to secure a loan to settle the fees outstanding for their 2019 audit. Which threat may occur as a result of the financial or other interests of a professional accountant or of an immediate or close family member? O Self-interest threats Familiarity threats O Advocacy threats O Self-review threats

UnderCover Ltd sells and supplies security and surveillance equipment and other spyware, and also provides related services.              The accountant of UnderCover Ltd is currently preparing its financial reports for the year ended 30 June 2020. The company is a reporting entity. The reports have not been completed as at 11 August 2020. Required: Explain (with reasons) in your own words how and where (including class/category where applicable) each of the events/transactions described below would be treated, recognised and/or disclosed in the financial reports of UnderCover Ltd for the year ended 30 June 2020.  Note: You need to consider whether information about the event or transaction needs to be presented separately. Journal entries and actual disclosure notes are not required. On 6 July 2020, the government announced new regulations relating to the sale and use of drones (i.e. unmanned aerial vehicles). Part of the new regulations require that from 1 September 2020, drones can…

When creditors who relied on an entity’s audited financial statements suffer monetary lossesafter a customer (the auditors’ client) goes bankrupt, what must the plaintiff creditors in alawsuit for damages show in a court that follows the doctrine in Credit Alliance?a. The auditors knew and specifically acknowledged identification of the creditors.b. The auditors could reasonably foresee them as beneficiaries of the audit because entitiessuch as this client use financial statements to obtain credit from vendors.c. The plaintiffs were foreseen users of the audited financial statements because they werevendors of long standing.d. All of the above

Mark Williams, CPA, was engaged by Jackson Financial Development Company to audit the financial statements of Apex Construction Company, a small closely held corporation. Williams was told when he was engaged that Jackson Financial needed reliable financial statements that would be used to determine whether to purchase a substantial amount of Apex Construction’s convertible debentures at the price asked by the estate of one of Apex’s former directors. Williams performed his audit in a negligent manner. As a result of his negligence, he failed to discover substantial defalcations by Carl Brown, the Apex controller. Jackson Financial purchased the debentures, but it would not have done so if the defalcations had been discovered. After discovery of the fraud, Jackson Financial promptly sold them for the highest price offered in the market at a $70,000 loss.   If Apex Construction also sues Williams for negligence, what are the probable legal defenses Williams’s attorney would raise?…

In prior periods, Globo Gym Services used the direct write off method to account for bad debts. Globo Gym Services historically had a stable client base and management did not continue to service clients who did not pay invoices due. Complete the following: (a) Describe the direct write off method of accounting for bad debts. (b) Explain with reference to one qualitative characteristic why the direct write off method was deemed appropriate prior to the COVID-19 pandemic and why it is unlikely to be appropriate since the pandemic. Clearly label each part of your answer related to parts a and b above.

Consider the following independent situations. For each of the situations described, suggest the appropriate accounting treatment for recording the liability. Back-up your answer with reference to the appropriate recognition criteria and disclosure requirements for liabilities, as per AASB 137. a)A manufacturing company is being sued by a customer group for losses sustained due to a faulty product design. The company’s lawyers feel the suit will likely succeed, but they cannot estimate the potential amount of damages that will be awarded. B)A resource company is obligated by municipal regulations to clean up the site of an active drilling operation in 10 years’ time when the resource has been fully extracted. The company is in its first year of operations and has no previous experience in cleaning up drilling sites C) A mining company has determined that it will cost approximately $10 million to restore a site that it previously mined

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Roy Company, a CPA firm, conducted an audit for the 2020 financial statements of Sally Corporation. During the course of the audit, the auditors found that shipments were made to an employee's friend and intentionally never recorded. Which of the following assertions was violated? * Completeness Classification O Cutoff Rights and obligations None of the above