EarthWorks Ltd a construction company, has placed an order on 1 June 2020 with HeavyDuty Trucks...

 

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EarthWorks Ltd a construction company, has placed an order on 1 June 2020 with HeavyDuty Trucks Ltd to purchase a new earth moving truck that needs custom fittings and modifications to a current truck at a proposed cost of $400,000. A deposit of $120,000 was made on placing the order and the final purchase price will be confirmed at delivery. As these modifications allow for improved operation of the truck, HeavyDuty Trucks will allow the order to be future changed or cancelled. Finalisation of the custom fittings and modifications has yet to begin and delivery of the truck is scheduled for three months time. On 1 June 2020 EarthWorks Ltd recorded the following accounting entry: Dr Earth-Moving Truck $400,000 Cr Bank Cr Accounts Payable $100,000 Format $300,000 Required: Applying the 2020 Conceptual Framework, does this meet the definition and recognition requirements of an Liability to be recorded in EarthWorks Ltd's account in June 2020? Proivde your answer in the table below. BBI Path: table With the deposit paid on the 1st of June, what account should be credited for this amount? I Answer: With the deposit paid on the 1st of June, what account should be debited for this amount? Answer: EarthWorks Ltd a construction company, has placed an order on 1 June 2020 with HeavyDuty Trucks Ltd to purchase a new earth moving truck that needs custom fittings and modifications to a current truck at a proposed cost of $400,000. A deposit of $120,000 was made on placing the order and the final purchase price will be confirmed at delivery. As these modifications allow for improved operation of the truck, HeavyDuty Trucks will allow the order to be future changed or cancelled. Finalisation of the custom fittings and modifications has yet to begin and delivery of the truck is scheduled for three months time. On 1 June 2020 EarthWorks Ltd recorded the following accounting entry: Dr Earth-Moving Truck $400,000 Cr Bank Cr Accounts Payable $100,000 Format $300,000 Required: Applying the 2020 Conceptual Framework, does this meet the definition and recognition requirements of an Liability to be recorded in EarthWorks Ltd's account in June 2020? Proivde your answer in the table below. BBI Path: table With the deposit paid on the 1st of June, what account should be credited for this amount? I Answer: With the deposit paid on the 1st of June, what account should be debited for this amount? Answer:

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Definition and Recognition Requirements of an Liability Path The Conceptual Framework for Financial Reporting provides a set of conceptual principles and objectives for financial reporting The Framewo... View the full answer