B i definition is satisfied future sacrifice of

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(b) (i) Definition is satisfied future sacrifice of economic benefit (obligation cannot be avoided if settlement is ultimately required); present legal obligation (under terms of guarantee agreement); past event (agreeing to the guarantee). Reliable measurement recognition criteria is met amount owing can be measured exactly. However, fails the probability test Until the borrower defaults, it is not known whether the guarantor will be required to honour the guarantee. The liability will only qualify for recognition if and when it becomes probable that the borrower will default and settlement will be required. At this stage the probability is close to zero. Accordingly, no liability can be recognised. However, disclosure about the liability may be warranted in the notes to financial statements, as information about the guarantee may be considered relevant to the users in making and evaluating their economic decisions. (ii) See (b)(i) for consideration of definition and reliable measurement recognition criterion both are met.
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Probability recognition is now met as it is considered likely that default will occur. Accordingly, the liability should be recognised (Dr expense; Cr liability). (c) Definition is satisfied future sacrifice of economic benefits (obligation cannot be avoided); present legal obligation (Court order); past obligating event (whatever action caused the damage). Probability test is met settlement must occur and so is certain. However, fails the reliable measurement test the cost of the required repairs is as yet unknown. Accordingly, no liability can be recognised. However, disclosure about the liability is warranted in the notes to the financial statements, as information about the obligation may assist users in making assessments of the present and expected future financial position of the entity. (d) Definition is satisfied future sacrifice of economic benefits (the social and/or political consequences of failing to make the donation leave the entity little discretion to avoid the obligation); present constructive obligation (longstanding history of making a $2000 donation per year); past event (its long-standing history of making such donations each year). Probability criterion is met history shows that making the donation is more than less likely. Reliable measurement test is also met there is a long-standing (20 year) history of making a $2000 per year donation. Accordingly, a $2000 liability should be recognised (Dr expense; Cr liability).
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