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Identify exists any onerous contract or a legal obligation

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Problem 1: Describe briefly, the accounting treatment ( accounting entry not required) of the following items with reference to the IAS 37. Also identify whether these exists any Onerous Contract, a legal obligation or a constructed obligation?

1. A small manufacturer has the practice of replacing the product within three months after the sales.

2. Government has introduced certain changes in the prevailing law to preserve the environment, this would require the company to train the certain staff to ensure the compliance. At the balance sheet date, no training is placed.

3. According to the new legislation passed on 15 July 2021, every Company has to install smoke filters having cost of 2 lac by the next year. In response to this, the XYZ Company has not install the filter till the current financial year ending on 30th June 2021.

4. A lawsuit has been filed against the XYZ Company for the damages. According to the lawyer, it is probable that the case will be in favor of the customer. But the reliable estimation of the damages is not possible.

5. A company has signed a non-cancelable contract for three years regarding the leasing a warehouse. Due to the certain reason the company has to shift its warehouse at another location.

Reference no: EM132955248

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