ACC1100 Lecture Notes - Lecture 10: Contingent Liability, Lease, Operating Lease
2 Nov 2018
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Document Summary
Estimated provision amounts provided for future expenditure recognised as liabilities. Arises from social or moral considerations, rather than legal sanctions. A valid expectation amongst parties due to an established pattern of past practice. Most full-time employees are entitled to four rectify any faults. There is a present obligation for the future out ow of economic bene ts to an external weeks" annual leave which accrues on a daily basis. If they leave, they"re entitled to receive a party. Therefore, de nition of liabilities is payment for any accumulated annual satis ed. leave. Given past, reliable estimate can be made. Staff work: dr wages expense, cr provisions for warranty, cr cash. Simultaneously earn annual leave: dr provisions for warranty, dr annual leave expense, cr parts inventory, cr wages payable, cr annual leave payable. Annual leave paid: dr annual leave payable, cr cash.
