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Prior to the financial year end of 31 July 20X9 Cannon Co has received a claim of $100,000 from a supplier forproviding poor quality goods which have damaged the supplier’s plant and equipment

Prior to the financial year end of 31 July 20X9, Cannon Co has received a claim of $100,000 from a supplier forproviding poor quality goods which have damaged the supplier’s plant and equipment. Cannon Co’s lawyers havestated that there is a 20% chance that Cannon will successfully defend the claim.Which of the following is the correct accounting treatment for the claim in the financial statements for the yearended 31 July 20X9?A Cannon should neither provide for nor disclose the claimB Cannon should disclose a contingent liability of $100,000C Cannon should provide for the expected cost of the claim of $100,000D Cannon should provide for an expected cost of $20,00028 Gareth, a sales tax registered trader purchased a computer for use in his business. The invoice for the computershowed the following costs related to the purchase:$Computer 890Additional memory 95Delivery 10Installation 20Maintenance (1 year) 25 ––––––1,040Sales tax (17·5%) 182 ––––––Total 1,222––––––How much should Gareth capitalise as a non-current asset in relation to the purchase?A $1,193B $1,040C $1,222D $1,015

Jun 22 2020 View more View Less

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