1) What intangible assets can never be recognised if internally generated? Why?

q2 a) Define a constructive obligation?

b) Define (a) a contingency and (b) a contingent liability

q3 What is the key characteristic of a present obligation?

q4 In each of the following scenarios, explain whether or not Omega Ltd would be required to recognise a provision. 1. As a result of its plastics operations, Omega Ltd has contaminated the land on which it operates. There is no legal requirement to clean up the land, and Omega Ltd has no record of cleaning up land that it has contaminated. 2. As a result of its plastics operations, Omega Ltd has contaminated the land on which it operates. There is a legal requirement to clean up the land. 3. As a result of its plastics operations, Omega Ltd has contaminated the land on which it operates. There is no legal requirement to clean up the land, but Omega Ltd has a long record of cleaning up land that it has contaminated ?

q5 A customer filed a lawsuit against Delta Ltd in December 2020 for costs and damages allegedly incurred as a result of the failure of one of Delta Ltds electrical products. The amount claimed was $3 million. Delta Ltds lawyers have advised that the amount claimed is extortionate and that Delta Ltd has a good chance of winning the case. However, the lawyers have also advised that if Delta Ltd loses the case its expected costs and damages would be about $500 000. Required How should Delta Ltd disclose this event in its financial statements as at 31 December 2020?

q6 Moolie Ltd is a manufacturer of surfboards. Pursuant to the sales terms, it gives warranties at the time of sales to purchasers of the surfboards for manufacturing defects that become apparent within two years from the date of sale. Based on past experience, Moolie is predicted to have 5% of the sales returned on manufacturing defects. Required Provides a useful decision tree to help management make judgements on classifying a liability. Using this decision tree, determine how the case should be recorded. Learn ?

q7 Groucho Ltd acquires Harpo Ltd. The restructuring plan, which satisfies the criteria for the existence of a present obligation under AASB 137/IAS 37 and AASB 3/IFRS 3, includes an advertising program to promote the new company image. The restructuring plan also includes costs to retrain and relocate existing employees of the acquired entity. Required Are these costs restructuring costs?

q8 Katz Ltds financial statements are authorised for issue on 24 August 2019. Required Identify whether each of the following would be a liability, a provision or a contingent liability, or none of the above, in the financial statements of Katz Ltd as at the end of its reporting period of 30 June 2019 1. An amount of $35 000 owing to Pigz Ltd for services rendered during May 2019. 2. Long service leave, estimated to be $500 000, owing to employees in respect of past services. 3. Costs of $26 000 estimated to be incurred for relocating an employee from Katz Ltd.'s head office location to another city. The staff member will physically relocate during July 2019. 4. Provision of $50 000 for the overhaul of a machine. The overhaul is needed every 5 years and the machine was 5 years old as at 30 June 2019. 5. Damages awarded against Katz Ltd resulting from a court case decided on 26 June 2019. The judge has announced that the amount of damages will be set at a future date, expected to be in September 2019. Katz Ltd has received advice from its lawyers that the amount of the damages could be anything between $20 000 and $7 million. ?