Unusual events: accounting treatment Consider the following events. How do you think each should be accounted for in the light of the IASB’s conceptual framework described in the chapter?

(a) A company buys 1,000 national lottery tickets at 1 euro each. (To win, a punter must choose six correct numbers between 0 and 90.) There is no secondary market for lottery tickets.

(b) An oil company is unsure how and when it should account for future field abandonment costs. It has just installed a production platform to develop a large oil field it has discovered in the Baltic Sea. Under environmental regulations governing oil production in these waters, it must remove and dismantle the platform at the end of the field’s economic life in 20 years’ time. The company reckons it can estimate the dismantlement and other abandonment costs reasonably accurately.

(c) A quoted company pays an annual bonus to senior managers, based on its profit performance in the year. To save cash, it decides to pay the bonus in the form of new shares – which in the current year involves the distribution of 100,000 shares. At the date of the award, it recognises compensation expense at the nominal value of the shares issued. Each share’s nominal value is five euros. Its market value at this time is 20 euros.

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