Reference no: EM132563741

Question - In accordance with the current Conceptual Framework, define liability as one of the five elements of the statutory financial statements and outline its recognition criteria.

Further, explain whether or not you would recognise each of the following independent items as a liability, by reference to the abovementioned liability definition and recognition criteria:

(a) Your company has a 30-year history of donating $5 000 each year to The Salvation Army. So far, no amount has been paid in the current year and nothing has been recorded in the accounts.

(b) Your rich uncle has lent $30 000 to your small business of delivery service (a single proprietorship) to buy a van, and told you to repay him whenever you like.

(c) Yesterday a court of law ordered you and all your business partners to repair significant environmental damage that your partnership firm had caused to a park next to your firm's premises. However, you do not yet have any idea as to how much this repair work will cost for your partnership business for which negotiations are being planned for two additional loans, each worth $3 million, from City Bank and ZNA Bank respectively.