Ican 2021 Corporate Reporting Question 5

Practice mixed question 5 from the 2021 Ican Corporate Reporting examination.

Ican 2021 Corporate Reporting Mixed

Question 5 ICAN • 2021 • CORPORATE REPORTING • mixed

Case Stimulus

International Accounting Standard (IAS) 37 on Provisions, Contingent Liabilities and Contingent Assets sets out the principles of accounting for these items. The inappropriate use of provisions had been an area where companies had been accused of manipulating financial statements and engaging in creative accounting.

Requirements

( a )

What is Provisions and how is it employed by management to engage in creative accounting?

( b )

Assuming the actual cash cost of the modification is a reliable estimate, calculate the provisions that should be included in the statement of financial position and the charges to the statement of profit or loss of Gama Plastic Limited in respect of the proposal for each of the years 2015 and 2016.

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About This Question

This is Ican 2021 Corporate Reporting Question 5. It is one of the mixed questions from the 2021 Ican Corporate Reporting examination.

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