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Distinguish between accrual and provision with examples

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Reference no: EM132498604

The following events relates to PPD company Ltd.

a. An amount of €35,000 owing to PU ltd for services rendered during May 2019.

b. Long service leave estimated to be €500,000, owing to employees in respect of past services

c. Costs of €26,000 estimated to be incurred for relocating an employee from PPD head office location to another city. The staff member will physically relocate during July 2019.

d. Damages awarded against PPD ltd resulting from a court case decided on 26 June 2019. The judge has announced that the amount of damages will be set at a future date, expected to be in September 2019. PPD has received advice from its lawyers that the amount of the damages could be anything between €20,000 and €7 million.

Requirement.

Question i. Distinguish between accrual and provision with examples

Question ii. Distinguish between provision and contingent liability with examples.

Question iii. Identify whether each of the above transactions (a-d) would be a liability, provision or a contingent liability in June 2019 financial statements

Reference no: EM132498604

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