In 20X6 Alpha AS made the decision to close a loss-making department in 20X7. The company proposed

Question:

In 20X6 Alpha AS made the decision to close a loss-making department in 20X7. The company proposed to make a provision for the future costs of termination in the 20X6 profit or loss. Its argument was that a liability existed in 20X6 which should be recognised in 20X6. The auditor objected to recognising a liability, but agreed to recognition if it could be shown that the management decision was irrevocable.

Required:
Discuss whether a liability exists and should be recognised in the 20X6 statement of financial position.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Accounting and Reporting

ISBN: 978-0273744443

14th Edition

Authors: Barry Elliott, Jamie Elliott

Question Posted: