1:15 Cut Volt ll 14% Read Only - You can't save changes to this f... 5x8 marks-40 marks Part 1 Question 1 Pursuant to the conceptual framework, for an item to be characterised as a liability the definition of liabilities must be applicable to the transaction or event, and the recognition criteria should also be satisfied. Applying the definition of liabilities, there are three key components in the definition of liability. these being: 1. There must be an expected future disposition of economic benefits to other entities. 2. There must be a present obligation. 3. A past transaction or other event must have created the obligation Take any two examples of liabilities and test if they meet all three requirements. Each example carries 4 marks. Response: Question 2 Compare primary and derivative financial instruments with some examples. Response: Click or tap here to enter text Question 3 Financial statement must provide a true and fair view. Explain what does this mean and how a company can ensure that the true and fair view is observed. Response: Question 4 Regulators may impose political costs on firms. However, there are ways that some firms practice to minimise such costs. Discuss with examples. Response: Click or tap here to enter text. Questions Geelong City Council spent $5 million on a gym and healthy facility for its staff. The objective of this new facility expenditure was to encourage staff adopt a healthy lifestyle. The use of facility will be free of cost. It is expected that although there will be no revenue generated from this new facility but operating costs are expected to be $650,000 per annum. Discuss if Geelong City Council should record the cost of new facility as an asset, or trent it all as an expense. Response: III o