State, with reasons, how you would account for the following items:

(i) The manufacturer of a snooker table has received a letter from a professional snooker player who was defeated in the final of a major snooker competition, threatening to sue the manufacturer for $1 million, being his estimate of his loss of earnings through failing to win the competition, on the grounds that the table was not level.

(ii) One of the company's employees was injured during the year. He had been operating a piece of machinery which had been known to have a faulty guard. The company's lawyers have advised that the employee has a very strong case, but will be unable to estimate likely financial damages until further medical evidence becomes available.One of the company's customers is claiming compensation for losses sustained as a result of a delayed delivery. The customer had ordered a batch of cut sheets with the intention of producing leaflets to promote a special offer. There was a delay in supplying the paper and the leaflets could not be prepared in time. The company's lawyers have advised that there was no specific agreement to supply the goods in time for this promotion and, furthermore, that it would be almost impossible to attribute the failure of the special offer to the delay in the supply of the paper.

Answer rating: 100% (QA)

i The manufacturer of the snooker table should account for the potential lawsuit by following the principles of the International Financial Reporting Standards IFRS In this case the manufacturer shoul... View the full answer