Every three years, Jimbo Ltd closes its factory for a three-month period in order to undertake extensive maintenance of
Posted: Sun Jun 05, 2022 5:05 pm
Every three years, Jimbo Ltd closes its factory for a
three-month period in order to undertake extensive maintenance of
its factory building and equipment. Jimbo Ltd, rather than
use internal resources to complete the maintenance, decided it
would enter into a contract with an external entity to undertake
the extensive maintenance of its factory building and
equipment. Details of the contract include:
The directors of Jimbo Ltd believe the planned maintenance
should be recognised as a liability.
Required
Advise the directors whether a liability should be recorded in
the financial period ending 30 June 2022. Justify your answer by
reference to the Conceptual Framework definition and recognition
criteria.
three-month period in order to undertake extensive maintenance of
its factory building and equipment. Jimbo Ltd, rather than
use internal resources to complete the maintenance, decided it
would enter into a contract with an external entity to undertake
the extensive maintenance of its factory building and
equipment. Details of the contract include:
The directors of Jimbo Ltd believe the planned maintenance
should be recognised as a liability.
Required
Advise the directors whether a liability should be recorded in
the financial period ending 30 June 2022. Justify your answer by
reference to the Conceptual Framework definition and recognition
criteria.