approximately 100 words Ultron Ltd has been sued by the municipal council for polluting the local...

approximately 100 words

Ultron Ltd has been sued by the municipal council for polluting the local river. It is very likely that Ultron Ltd will lose the case. However, the lawyers have advised Ultron Ltd that at this time it would not be possible to estimate what the total damages would be.

Required:

Should Ultron Ltd recognize a liability for this event? Justify your answer by reference to the definitions and recognition criteria in the Conceptual Framework.

Expert Solution

A contingent liability is an obligation to pay that may arise depending upon the outcome of future event.

A contigent liability is recognised only if it is probabale that there will be an outflow of econmic resources and that outflow can be reasonabally estimated.

In the given situtaion Ultron ltd has been sued for polluting river,on losing the case Ultron will be required to pay depending upon the outcome of the case.Since the obligation to pay depend on the outcome of future event it is a conitgent liability.

A contingent liability is only recorded if the outflow is probabale and it can be reasonabally estimated.In the given case the lawyers of the Ultron ltd says that it is very likely that ultron will lose th case so the outflow of resources is probable but the lawyers can not measure the damages, so the outflow can not be reasonabally estimated.

So, since outcome is probable but can not be reasonabally estimated Ultron ltd should not recognise a liability for this event.

ekkarill92 answered 2 years ago

Answer length - approximately 100 words Crystal Ltd has spent $375,000 this year on a project...

Answer length - approximately 100 words Crystal Ltd has spent $375,000 this year on a project to develop a new range of wrinkle-reducing skincare products. At this current stage of development, it is too early for Crystal Ltd’s management to be able to predict whether this project will prove to be profitable? Required: Explain whether Crystal Cosmetics should recognize this expenditure as an asset at the end of the current financial year. Justify your answer by reference to the asset...

A city council has estimated that it has a surplus of $100 Million (M). The council...

A city council has estimated that it has a surplus of $100 Million (M). The council is exploring the following three projects, each of which costs $100 M. a. A bridge which takes five years to build, then yields $50M benefit per year for the next 10 years. The benefits are received at the end of each year. Assume that the costs are spread out evenly over the five years (i.e. year 1 to year 5) and are paid at...

approximately 100 words Greenworks Ltd wants to focus on ‘people, profits, planet’. The board of directors...

approximately 100 words Greenworks Ltd wants to focus on ‘people, profits, planet’. The board of directors has proposed linking top managers’ pay to broad measures of environmental sustainability, and worker and customer satisfaction. The board proposes that bonuses for management will be linked to targets such as the reduction of greenhouse gas emissions and energy use, the introduction of new environmentally friendly products and improvements in workforce morale. Required Advise the board of the two (2) potential positive implications and...

Has Cuba been successful at eliminating racial discrimination? 100 to 200 words

(Answer length - approximately 100 words) From January 2005, Australia has adopted the accounting standards issued...

(Answer length - approximately 100 words) From January 2005, Australia has adopted the accounting standards issued by the International Accounting Standard Board (IASB). As a result, the role and functions of the Australian Accounting Standards Board (AASB) has changed since 2005. Required: Given the current role of the AASB, do you think that the AASB should be removed and Australian companies should simply follow the IASB standards? Provide two justifications to support your answer.

Leader Enterprises Ltd. follows IFRS and has provided the following information: 1.In 2016, Leader was sued...

Leader Enterprises Ltd. follows IFRS and has provided the following information: 1.In 2016, Leader was sued in a patent infringement suit, and in 2017, Leader lost the court case. Leader must now pay a competitor $50,000 to settle the suit. No previous entries had been recorded in the books relative to this case because Leader's management felt the company would win. 2.A review of the company's provision for uncollectible accounts during 2017 resulted in a determination that 1.5% of sales...

You have been contracted by the City of Sydney Council to inspect an issue that has...

You have been contracted by the City of Sydney Council to inspect an issue that has been reported by residents living in a western suburb. The residents claim that one of the roads in their suburb has lately had issues with traffic speeding. The City of Sydney Council wants you to investigate if traffic speeding is an issue and, if this is the case, they will invest in building asphalt speed bumps to enforce reduced traffic speeds on that particular...

Ruby Bhd has been sued by its supplier due to breach of contract. Discuss whether a...

Ruby Bhd has been sued by its supplier due to breach of contract. Discuss whether a liability can be recognized assuming that: a) It is probable that Ruby Bhd would be liable for RM500,000 as a result of lawsuit; b) It is not probable that Ruby Bhd would be liable for RM500,000. c) It is probable that Ruby Bhd would be liable, however the legal advisors could not estimate the liability amount reliably.

Recently the national average yield on municipal bonds has been  = 4.19% with a standard...

Recently the national average yield on municipal bonds has been  = 4.19% with a standard deviation of ?= 1.15%. A random sample of 16 Arizona municipal bonds had an average yield of 5.11%. Does this indicate that the population mean yield for all Arizona municipal bonds is greater than the national average? Use a 5% level of significance. Assume ? is normally distributed. STEP 1: State the null and alternate hypotheses and the level of significance. Is the test...

The following questions require you to determine answers (approximately 100 to 150 words) based on given,...

The following questions require you to determine answers (approximately 100 to 150 words) based on given, data and/or scenario: 1: Can a sudden decrease in unemployment be consistent with declining aggregate output? Also, can sudden increase in unemployment be consistent with a rising RGDP?

Question