There Are 3 Main Points to the NZ Framework Definitions

question 8

Essay

There are 3 main points to the NZ Framework definitions of an asset.Apply those 3 main points to each of the following scenarios,and determine whether an asset should be recognised and recorded in the Balance Sheet.
a A firm is involved in a court case in which it is suing a competitor for $100,000 for copying its product and trademark.The court case has not yet been decided.
b A firm has signed a contract of purchase for 2 tonnes of bananas in Ecuador,and also has an insurance contract for loss of sales and profits if the bananas are damaged,lost or held back in any way from the voyage to New Zealand.
c A firm has just signed a world-famous New Zealand netballer to work for them in a marketing position.The netballer's international contacts and high profile are expected to win the firm several lucrative contracts.The contract of employment may be terminated by either party,provided written notice is given 2 weeks in advance of the termination date.

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Definitions:

Statute of Frauds

A legal principle requiring certain types of contracts to be written and signed to be enforceable.

Guarantee Indebtedness

A promise or assurance by one party to assume or pay off the debt of another party if they default.

Misrepresentation

A false statement or deception made by one party to another, often related to the terms or conditions of a contract.

Behavioral Characteristics

Traits or patterns of action or reaction that are characteristic of an individual or group in certain situations.