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Sir, In Flyscreen MTQ, where the provision cost is to be charged to profit or loss, 20,000 provision is understood. But why is the carrying value used for the cows? shouldnt it be valued at fair value? And in that case, shouldn’t the provision be for 30,000(150,000-120,000)
How is the provision of the employees calculated as 400,000? Since the redundancy costs would be only for 30 employees, wouldn’t the provision be made for only those 30 employees?
Thanks
“… why is the carrying value used for the cows?”The value in the accounting records is $180,000 and we have an offer of only $120,000. Until we get a better offer, $120,000 looks like the net recoverable amount for those cows so we need to provide $60,000
“Since the redundancy costs would be only for 30 employees …” – the move to Azerbaijan offered to the other 10 could be seen to be constructive dismissal – it looks suspiciously like an attempt to evade legal responsibilities
OK?
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