Use the following information to answer questions 20:
Ngcobo Ltd participates in the oil industry, which carries the risk of contaminating land and rivers. Ngcobo Ltd commits to cleaning up the
damage it has incurred and makes this commitment clear in both its annual report and on its website.
Ngcobo Ltd undertook an analysis of the implementation of local laws in two countries where it operates, A and B, and the probable costs
associated with the cleanup of in each country:
Local laws Environmental clean-up cost
A i i
Laws assocl_ated withith the
the cleanup
cl of f environmental
envil | R1 500 000
damage are being enforced.
B Law on the cleaning up of environmental damage will be
R3 000 000
enacted shortly after the year-end.
QUESTION 20:
Scenario B will be recognised as a?
O 1. Liability;
O 2. Provision;
O 3. Contingent liability;
O 4. Contingent asset
,Use e unUWInY U1 W anBWEr YuesuLue 17 anu £u.
Ngcobo Ltd participates in the oil industry, which carries the risk of contaminating land and rivers. Ngcobo Ltd commits to cleaning up the
damage it has incurred and makes this commitment clear in both its annual report and on its website.
Ngcobo Ltd undertook an analysis of the implementation of local laws in two countries where it operates, A and B, and the probable costs
associated with the cleanup of in each country:
Local laws Environmental clean-up cost
A: Laws assoc!ated with the cleanup of environmental R1 500000
damage are being enforced.
B Law on the cleaning up of environmental damage will be
R3 000 000
enacted shortly after the year-end.
REQUIRED:
QUESTION 19:
Scenario A will be recognised as a?
O 1. Contingent asset.
O 2. Contingent liability;
O 3. Provision;
O 4. Liability;
, Use the following information to answer question 18:
A lawsuit against Maraisane Ltd is pending and is in connection with an injury an employee sustained while performing work-related duties at the
factory. According to Maraisane Ltd.'s lawyers, there is a considerable probability that the entity will be held liable for R600 000 in damages.
Maraisane Ltd. is insured against these types of events. The insurance provider is likely to reimburse up to R500 000 for all claims of damages.
QUESTION 18:
At what amount will the claim be recognised?
O 1.R500 000;
O 2.R600 000
O 3.R0;
O 4.R100 000;
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