B407 Week 13 Tutorial question

B407 Week 13 Tutorial question - B407F Week 13 Tutorial...

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1 B407F Week 13 Tutorial – Overview of the framework of accounting and interim reporting Question 1 An airline places a non-cancellable order for a new airplane with one of the major commercial aircraft manufacturers at a fixed price, delivery in 30 months, payment in full to be made at delivery. a. Under the current accounting framework, do you think the airline should recognize any asset or liability at the time it places the order? b. One year later, the price of this airplane model has risen by 5%, but our airline had locked in a fixed, lower price. Do you think the airline should recognize any asset (and gain) at the time when the price of the airplane rises? If the price fell by 5%, instead of rising, do you think the airline should recognize a liability (and loss)? Question 2 On 28 May 2009 $20 000 cash was stolen from Fremantle Ltd’s night safe. Explain how Fremantle should account for this event, justifying your answer by reference to relevant Framework definitions and recognition criteria
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B407 Week 13 Tutorial question - B407F Week 13 Tutorial...

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