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Petroncan , CO operates in the oil industry, contaminating land at foreign location. The foreign...

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Accounting

Petroncan , CO operates in the oil industry, contaminating land at foreign location. The foreign country does not have environmenT law that will require Petrocan co. to clean up the contamination. However, Petrocan has a widely published policy to clean up all contamination that is causes, and it has a record of honoring this policy. Requirement: The company applies the three criteria of IAS 37 to determine whether recognition of a provision is appropriate.

1.. Is the criterion 2, present obligation as a result of a past obligating event, met ? how? Or how not? 2. Is the criterion

2, an outflow of resources embodying economic benefits in settlement is probable. how? Or how not?

3. Determine whether Petrocon Co. should recognize a provision, if it can make a reliable estimate of the costs of clean-up. Yes___ or no____ . if yes, describe the recognition for what amount and in which financial schedules. If not, what accounting treatment should Petro Can do?

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