Question: Entity A is preparing its financial statements for the year ended 30 September 2023. The company is now facing a number of legal claims from

Entity A is preparing its financial statements for the year ended 30 September 2023. The company is now facing a number of legal claims from its customers about some faulty products sold. The total amount being claimed is $2,250,000. The company's lawyers say that the customers have an 80% chance of being successful. REQUIRED: According to HKAS 37 Provisions, Contingent Liabilities and Contingent Assets, what journal entries should be made in respect of the above case in Entity A's statement of financial position on 30 September 2023? ACCOUNTS FOR INPUT: | Legal claim expense | Legal claim income | Provision for legal claim expense | | Bank | Contingent liability | Contingent asset | Provision for legal claim income | ANSWER: Journal Entries

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

1. Which ONE of the following would require a provision for a liability to be created by BW at its reporting date of 31 October 2019? * (2 Points) BW makes refunds to customers for any goods returned...

3. MM has the following two legal claims outstanding: - A legal action claiming compensation of 650,000 filed against MM in March 2020 . - A legal action taken by MM against a third party, claiming...

3. MM has the following two legal claims outstanding: - A legal action claiming compensation of 650,000 filed against MM in March 2020. - A legal action taken by MM against a third party, claiming...

plz 6. Tunner's financial statements show a profit for the year of $2million. On 1 January 2019, Tunner had 4 million shares in issue. There were no new issues of shares in the year, but there were 1...

MM has the following two legal claims outstanding: A legal action claiming compensation of 650,000 filed against MM in March 2020. A legal action taken by MM against a third party, claiming damages...

Target is preparing its financial statements for the year ended 30 September 20X7. Target is facing a number of legal claims from its customers with regards to a faulty product sold. The total amount...

A report examine theprovisions and contingencies in two different company, one is Rheinmetall AG aapliesGerman local GAAP, another is GentrackGROUP LIMITED appliesInternational Financial Reporting...

Georgina Company is preparing its financial statements for the year ended 30 September 2015. The following matters are all outstanding at the year end. (1) Georgina is facing litigation for damages...

Telecel Company is preparing its financial statements for the year ended 30 September 2015. The following matters are all outstanding at the year end. Telecel is facing litigation for damages from a...

Scenario: As of October 31, 2023, you are a member of your firm's audit team responsible for reviewing the financial statements of Karke Dikhaao Limited (Karke) for the fiscal year ending on...

On January 1, 2020, Toyota Corporation sold a piece of equipment costing P570,000 with accumulated depreciation of P240,000 on the date of sale. In consideration of the sale, Toyota Corporation...

The following linear programming problem has been written to plan the production of two products. The company wants to maximize its profits. X1 = number of product 1 produced in each batch X2 =...

3 . A \ ( \ $ 5 \ ) - year bond that pays a \ ( 6 \ % \ ) coupon annually has a face value of \ ( \ $ 1 , 0 0 0 \ ) . You use this face value as collateral to create a \ ( \ $ 5 0 0 \ ) floater (...

5. Develop a scenario comparing two PH programs and involving the use of a CBA.

Read the source of spotlight on the law 9.8 and compare their decisions over reasonable adjustment with more recent cases. Has the position changed as more decisions have been made at higher courts?

Annualised hours (see case study 7.1 and focus on research 7.1) appear to have considerable advantages for the employer. Read the article and book chapter on which these extracts are based and...

Specify which techniques of training are best suited to the following: Learning to drive a car Students needing a basic understanding of the business cycle Teaching teenagers about personal...