In 2018 waste from Beef Limited destroyed a section of Suffers Heights. Members of the community demonstrated,
Question:
In 2018 waste from Beef Limited destroyed a section of Suffers Heights. Members of the community demonstrated, and the company (Beef Limited) restored the land at a cost of $830,000. In 2019 another section of Suffers Heights was destroyed. The Suffers Heights Citizens Association submitted an estimate for $550,000 to restore the land. Beef Limited is refusing to pay, indicating that the other three companies in the community should pay 75% of the restoration costs. In 2018 the other three companies had refused to pay any of the restoration costs.
Beef Limited year-end is December 31, 2019.
Required:
Explain the accounting treatment in the books of Beef Limited for the $550,000 estimate submitted by Suffers Heights Citizens Association for the financial year ended December 31, 2019. Support your answer with the relevant IFRS.
Expert Answer:
As per IAS 37 Provision Contingent Liability and Contingent Assets BEEF Limited should recognize 550... View the full answer
