Which one of the following would not be valid grounds for a provision? A. A company has always cleaned up any environmental contamination caused by its operations, but is not legally obliged to do so. B. A company is leasing an office building for which it has no further use. However, it is tied into the lease for another year. C. A company is closing down a division. The Board has prepared detailed closure plans which have been communicated to customers and employees. D. A company has acquired a machine which requires a major overhaul every three years. The cost of the first overhaul is reliably estimated at GHS120,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Which one of the following would not be valid grounds for a provision?

A. A company has always cleaned up any environmental contamination caused by its operations, but is not legally obliged to do so.

B. A company is leasing an office building for which it has no further use. However, it is tied into the lease for another year.

C. A company is closing down a division. The Board has prepared detailed closure plans which have been communicated to customers and employees.

D. A company has acquired a machine which requires a major overhaul every three years. The cost of the first overhaul is reliably estimated at GHS120,000

Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Accounting for Current liabilities, Provisions and Contingencies
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education