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Distinguish between a provision and a contingent liability

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Reference no: EM132990556

The following provisions have been included in the financial statements of Toffee Limitedat 30 June 2020:

  1. Provision for repair costs for sales under warranty R210 000
  2. Provision for expected operating losses to be incurred in a trade fair scheduled for September 2020 R53 000
  3. Provision for severance pay to employees in a discontinued Operation R50 000

Required:

Problem 1: Distinguish between a provision, liability, and a contingent liability.

Problem 2: State with reasons, in each of the above 3 cases, whether a provision shall be recognised at 30 June 2020.

Reference no: EM132990556

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