Recognition of liabilities State whether the following would be recognised as a liability. If so, what account name would you use?

1 The company has a legal obligation via contract to repair any deficiencies occurring in the first two years in the buildings it constructs.

2 The company has no legal obligation but as a matter of course it repairs any deficiencies occurring in the first two years in the buildings it constructs. This policy has helped it retain a good reputation in the industry.

3 Based on the preliminary financial results the company expects to pay a bonus of $1 million to staff. The company has now paid bonuses to staff for the last 10 years.

4 At the end of the year it is calculated that staff have on average taken 13 of their 20 days of annual leave.

5 The company has signed the contract to purchase a piece of equipment worth $300 000. The equipment will be delivered to it in three weeks and will be installed in the following week.

6 The company has guaranteed a loan of $1.2 million for one of its very profitable subsidiaries.