sep 2018

Hello Chris,

Which of the following meet(s) the recognition criteria for an asset and/or a liability?
(1) Green Co spent $100,000 providing health and safety training to its staff
(2) Green Co has been told by a brand consultancy that the value of its internally created brands is
$2,000,000
(3) Green Co is suing a supplier for $450,000 for losses that it suffered due to faulty goods. Greene Co is
likely, though not certain, to win the court case
(4) Green Co has sold goods subject to a five-year warranty on which it expects some claims will be made.

-The answer is 4.
-My confusion lies on the part where it says “on which it expects some claims will be made.” Is an expectation enough to say that this transaction( sales and the warranty) would result into probable outflow of economic benefits?

Thanks.