Question 2: On 1 December 20X5, the directors of Force Ltd decided to close down a...

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Question 2: On 1 December 20X5, the directors of Force Ltd decided to close down a division. This decision was announced to the employees affected on 15 December 20X5, however, the actual closure occurred on 31 January 20X6, prior to the 20X5 financial statements being authorised for issue. Expenses and other items connected with the closure were as follows: Redundancy costs Staff retraining Operating loss for the month to 31 January 20X6 (estimated at 31 Dec) Onerous contracts Profit on sale of property $m 22 10 12 16 15 Requirement: Discuss with suitable explanations the financial reporting treatment of the above issue on the financial statements for the year ended 31 December 20X5. (10 marks) Question 2: On 1 December 20X5, the directors of Force Ltd decided to close down a division. This decision was announced to the employees affected on 15 December 20X5, however, the actual closure occurred on 31 January 20X6, prior to the 20X5 financial statements being authorised for issue. Expenses and other items connected with the closure were as follows: Redundancy costs Staff retraining Operating loss for the month to 31 January 20X6 (estimated at 31 Dec) Onerous contracts Profit on sale of property $m 22 10 12 16 15 Requirement: Discuss with suitable explanations the financial reporting treatment of the above issue on the financial statements for the year ended 31 December 20X5. (10 marks)

Answer rating: 100% (QA)

According to IAS 37 Provisions Contingent Liabilities and Contingent Assets Force Ltds action result... View the full answer