Under IFRS, If a Company Can Determine a Reasonable Estimate

question 39

Multiple Choice

Under IFRS, if a company can determine a reasonable estimate of an expected loss from a lawsuit and it is probable it will lose the suit, it should

• A) disclose the basic facts regarding the suit in the notes to its financial statements.
• B) accrue the loss.
• C) neither disclose in the notes nor accrue the loss.
• D) pay the amount estimated.

---

Definitions:

Inventory

The total amount of goods or materials held in stock by a business, including raw materials, work-in-progress, and finished goods.

Inconsistency

The quality of being irregular, erratic, or not consistent in principles, actions, or outcomes, often leading to unpredictability or conflict.

Load Factor

In the context of utilities, it's a measure of the efficiency of energy usage, calculated as the ratio of average load to the peak load in a given period.

Operating Expense

Costs associated with the day-to-day functions of a business, excluding direct production costs.