Which of the following transactions would be acceptable as a provision under IAS 37? XY decided to reorganise a manufacturing facility during

Which of the following transactions would be acceptable as a provision under IAS 37?

XY decided to reorganise a manufacturing facility during June 2020 and commissioned a consulting engineer to undertake a feasibility study.

A provision of $2 million for the reorganisation was created as at 31 August 2020. In September 2020, AB contracted with a training company to provide essential training for its workforce to be carried out in October and November 2020.

A provision for the necessary expenditure was created in its accounts at 31 August 2020.

CDE was ordered by its local authority in October 2020 to carry out an environmental clean-up in 2021 following pollution from one of its factories.

GY acquired HT and provided for likely future operating losses at the date of acquisition amounting to $250,000.

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Expert Solution

This transaction would be acceptable.

A. XY decided to reorganise a manufacturing facility during June 2020 and commissioned a consulting engineer to undertake a feasibility study. A provision of $2 million for the reorganisation was created as at 31 August 2020.

This transaction would be acceptable.

Junaid answered 1 year ago

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