Question
In: Accounting
You are the manager responsible for the audit of Boston Co, a producer of chocolate and...
You are the manager responsible for the audit of Boston Co, a producer of chocolate and confectionery. The audit of the financial statements for the year ended 31 December 2017 is nearly complete. You review the audit working papers and discover the following events are revealed. Suggest the proper accounting treatment for each of the following items in accordance with IAS 37 — Provisions, Contingent Liabilities, and Contingent Assets.
(i) $2 million bills receivable were discounted with resource during the year and its maturity date is on 15 February 2018. The company needs to repay the amount to the bank if the customer unpay the bill on the maturity date.
(ii)An ex-employee is suing the company for unfair dismissal and has claimed $500,000 damages against the company.The component auditors obtained verbal confirmation from Boston Co’s legal advisors that the ex-employee will not succeed in any claim, and have been negotiating with him who has reduced his claim to $300,000. A $200,000 provision has been made.
(iii) The company has guaranteed the overdraft of one of the directors to the extent of $10 million as at 31 December 2017.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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