Suppose that a company has a facility located where disastrousweather conditions often occur. Should it report a probable lossfrom a future disaster as a liability on its balance sheet?Explain.

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Irving HeathcoteLv2

28 Sep 2019

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Under the assumption that your company has a facility located where disastrous weather conditions often occur, discuss how you, as the company accountant, should report a probable loss from a future disaster as a liability on its balance sheet.

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Zeta, Ltd., a company that prepares its financial statements in accordance with IFRS, has the following pending items at December 31, 2014.

The company is the defendant in a product liability lawsuit as a result of injuries incurred by purchasers of its products. Legal counsel has indicated that an unfavorable verdict in the amount of $650,000 is probable.

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The entity sells a product that is subject to a warranty. The estimated warranty liability is $150,000.

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