Question: Exercise 1.6 DEFINITIONS OF ELEMENTS AND RECOGNITION CRITERIA Explain how you would account for the following items/situations, justifying your answer by reference to the

Exercise 1.6 ★ DEFINITIONS OF ELEMENTS AND RECOGNITION CRITERIA Explain how you would account for the following items/situations, justifying your answer by reference to the Conceptual Framework’s defi nitions and recognition criteria:

(a) A trinket of sentimental value only.

(b) You are guarantor for your friend’s bank loan: (i) You have no reason to believe your friend will default on the loan. (ii) As your friend is in serious fi nancial diffi culties, you think it likely that he will default on the loan.

(c) You receive 1000 shares in X Ltd, trading at $4 each, as a gift from a grateful client.

(d) The panoramic view of the coast from your café’s windows, which you are convinced attracts customers to your café.

(e) The court has ordered your fi rm to repair the environmental damage it caused to the local river system. You have no idea how much this repair work will cost.

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