Reference no: EM132608023

Note the following about LarPower -

1. Operates in the oil industry.

2. Is a US subsidiary of a British company.

3. Reports to its parent under IFRS.

4. Reports to its US-based lender under US GAAP.

5. Cleans up any soil contamination when so legally required by the country in which it contaminates any soil.

Note the following about Country Q:

1. One of the countries in which LarPower operates

2. Has no legislation requiring cleanup

3. LarPower has inadvertently contaminated soil there for years.

4. As of December 31, 2020, a law requiring cleanup of contaminated soil will almost surely be passed.

5. This new cleanup law will likely not be issued until after year-end.

Provocations:

Question 1. Must LarPower recognize a provision for the cleanup cost in its reporting to its British Parent as of 12/31/2020?

Question 2. What about in its reporting to its US-based Lender?

Question 3. Say the new legislation in Country Q will require much re-training of LarPower's employees who are based in Country Q. This training will occur after 12/31/2020. Must LarPower recognize a provision for the retraining in its reporting to its British Parent as of 12/31/2020?

Question 4. What about in its reporting to its US-based Lender?