Question
WT Ltd is a large company that consists of many divisions. The following are scenarios that need to be discussed: Scenario 1: Management decided to
WT Ltd is a large company that consists of many divisions. The following are scenarios that need to be discussed: Scenario 1: Management decided to combine the packaging department into the retail department. Management created a detailed, formal plan for restructuring and the plan was announced publicly to all the shareholders on 30 September 2022. The company has a year end of 31 December 2022 The following costs will be incurred: Implementation costs R250 000 Future Operating Losses R 50 000 Advertising R 25 000 Discuss with reference to IAS37 whether the restructuring can be recognized as a provision. Indicate the amount at which it can be recognised? (10 marks)
Scenario 2 : An employee of RT Ltd was injured at work on 15 June 2022 due to faulty equipment, He is suing RT LTD. The lawyers have advised that it is probable that the company will be held liable and the most likely outcome would be R5 000 000. Discuss with reference to IAS37 whether the restructuring can be recognized as a provision? (5 marks)
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