The following provision has been included in the financial statements of Thriving (Pty) Ltd as at...

 

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The following provision has been included in the financial statements of Thriving (Pty) Ltd as at 31 December 2023: • Provision for expected future operating losses REQUIRED: Discuss how the provision should be accounted for in the annual financial statements of Thriving (Pty) Ltd so as to comply with IAS 37 of the International Financial Reporting Standards. In the following financial year, 2023, actual costs paid amount to: R100 000 PART B: During 2022, Enviroserve (Pty) Ltd is involved in litigation relating to environmental damages and is being sued for damages amounting to R800 000. Legal costs are estimated to amount to R40 000. The definition and recognition criteria of a provision are met. • • Legal costs Environmental damage repair costs (3 marks) R 820 000 R 40 000 REQUIRED: Prepare all the necessary general journal entries to account for the environmental damage and legal costs in the 2022 and 2023 financial statements of Enviroserve (Pty) Ltd. Journal dates and narrations are not required. The following provision has been included in the financial statements of Thriving (Pty) Ltd as at 31 December 2023: • Provision for expected future operating losses REQUIRED: Discuss how the provision should be accounted for in the annual financial statements of Thriving (Pty) Ltd so as to comply with IAS 37 of the International Financial Reporting Standards. In the following financial year, 2023, actual costs paid amount to: R100 000 PART B: During 2022, Enviroserve (Pty) Ltd is involved in litigation relating to environmental damages and is being sued for damages amounting to R800 000. Legal costs are estimated to amount to R40 000. The definition and recognition criteria of a provision are met. • • Legal costs Environmental damage repair costs (3 marks) R 820 000 R 40 000 REQUIRED: Prepare all the necessary general journal entries to account for the environmental damage and legal costs in the 2022 and 2023 financial statements of Enviroserve (Pty) Ltd. Journal dates and narrations are not required.

Answer rating: 100% (QA)

Part A Provision for Expected Future Operating Losses To account for the provision for expected future operating losses in accordance with IAS 37 Prov... View the full answer