Elements Essay

Question 1

A)

Answer 1

Asset- resource controlled and a result of Past events

Liability - present obligation , result of past events

Recognised if probable inflow/ outflow of future economic resources can be measured reliably

Question 2

B

Answer 2

Consistency of financial reporting and avoiding

Over/understating assets/ liabilities with the problems of creative accounting

Question 3

C

Answer 3

1) Seems to meet the definition of an asset as above (intangible)
2) appears to lack any ability to control the use of the facilities so the costs should be expended rather than being treated as an asset
3) warranty obligations seem to meet the definition of a liability, the major difficulty would be in reliably measuring the extent of the costs, so a provision might be the best treatment