QUESTION TWO$-$CLO$3$

$7\mathrm{.}5$ MARKS

Identify whether each of the following would be a liability, a provision or a contingent liability, or none of the above, in the financial statements of the entity as at the end of its reporting period $($provide brief explanation to your answers$).$

a$-$ As a result of its plastics operations, Company G has contaminated the land on which it operates. There is no legal requirement to clean up the land, and Company $G$ has no record of cleaning up land that it has contaminated.

b$-$ Damages awarded against Company A resulting from a court case decided on $26$ June $2016.$ The judge has announced that the amount of damages will be set at a future date, expected to be in September $2016.$ Company A has received advice from its lawyers that the amount of the damages could be anything between $$20000$ and $$7$ million.

c$-$ Long service leave, estimated to be $$500000,$ owing to employees in respect of past services.

d$-$ At $31$ March $2020,$ the company owns a fleet of motor lorries, all of which require an annual service. This servicing work is expected to occur in the first few month of the year to $31$ March $2021,$ at an estimated cost of $50,000.$

e$-$ e$-$the board of directors decided to cloge down one of the company's operations. this decision had been announced to the workforce and a detailed plan had been drawn up for its implementation. The closure would involve redundancy payments of $375,000.$