Liabilities, Provisions, or Contingent Liabilities?

You were given a set of additional data regarding the Financial Statement of a company. Identify whether each of the following would be a liability, a provision or a contingent liability, or none of the above. The companys end of the reporting period was 30 June 2020. Assume that companys financial statements are authorised for issue on 24 August 2020.

(a) An amount of $70 000 owing to another company for services rendered during May 2020.

(b) Long-service leave, estimated to be $150 000, owing to employees in respect of past services.

(c) Costs of $10 000 estimated to be incurred for relocating a staff from the head office location to another city. The staff member will physically relocate during July 2020.

(d) Provision of $150 000 for overhaul of a machine. The overhaul is needed every five years and the machine was five years old as at 30 June 2020.

(e) Damages awarded against the company resulting from a court case decided on 26 June 2020. The judge has announced that the amount of damages will be set at a future date, expected to be in September 2020. The company has received advice from its lawyers that the amount of the damages could be anything between $120 000 and $7 million.