Under the new legislation, an entity is required to fit smoke filters to its factories by December 30, 2020. The entity has not fitted the smoke filters. Which of the following is correct regarding the action of the entity? * There is no obligation because there is no obligating event for the cost of fitting smoke filters or for fines under the legislation. Thus, no provision is recognized. O A liability for not fitting the smoke filters will be recorded. There is obligation because there is an obligating event for the cost of fitting smoke filters or for fines under the legislation. Thus, provision is recognized. O A liability is recorded but the best estimate should be determined.
Under the new legislation, an entity is required to fit smoke filters to its factories by December 30, 2020. The entity has not fitted the smoke filters. Which of the following is correct regarding the action of the entity? * There is no obligation because there is no obligating event for the cost of fitting smoke filters or for fines under the legislation. Thus, no provision is recognized. O A liability for not fitting the smoke filters will be recorded. There is obligation because there is an obligating event for the cost of fitting smoke filters or for fines under the legislation. Thus, provision is recognized. O A liability is recorded but the best estimate should be determined.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
t17
Transcribed Image Text:. Under the new legislation, an entity is required to fit smoke filters to its factories by December
30, 2020. The entity has not fitted the smoke filters. Which of the following is correct regarding
the action of the entity? *
There is no obligation because there is no obligating event for the cost of fitting smoke filters or for fines
under the legislation. Thus, no provision is recognized.
O A liability for not fitting the smoke filters will be recorded.
There is obligation because there is an obligating event for the cost of fitting smoke filters or for fines
under the legislation. Thus, provision is recognized.
O A liability is recorded but the best estimate should be determined.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education