Develop a new range of chemical-free cosmetics

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Reference no: EM133081096

Conceptual Framework

Question 1: Describe the qualitative characteristics of financial information according to the Conceptual Framework, distinguishing between fundamental and enhancing characteristics.

Question 2: Explain how Q Ltd should account for the following items/situations, justifying your answer by reference to the Conceptual Framework's definitions and recognition criteria:

a. A trinket of sentimental value only.
b. Q Ltd is guarantor for an employee's bank loan:
(i) You have no reason to believe the employee will default on the loan.
(ii) As the employee is in serious financial difficulties, you think it likely that he will default on the loan.
c. Q Ltd receives 1000 shares in X Ltd, trading at $4 each, as a gift from a grateful client.
d. The panoramic view of the coast from Q Ltd's café windows, which you are convinced attracts customers to the café.
e. The court has ordered Q Ltd to repair the environmental damage it caused to the local river system. You have no idea how much this repair work will cost.

Question 3: Glam Cosmetics has spent $220 000 this year on a project to develop a new range of chemical-free cosmetics. As yet it is too early for Glam Cosmetics' management to be able to predict whether this project will prove to be commercially successful.

Explain whether Glam Cosmetics should recognise this expenditure as an asset, justifying your answer by reference to the Conceptual Framework asset definition and recognition criteria.

Reference no: EM133081096

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