The Australian Securities and Investment Commission (ASIC) is taking Mountain Ltd to court for breach of...

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Accounting

The Australian Securities and Investment Commission (ASIC) istaking Mountain Ltd to court for breach of the legislation underthe Corporations Act 2001 in the 2018 financial year. The matter isstill ongoing, and the company does not expect the matter to beresolved until November 2020. 1f found liable, the fines could bebetween $200,000 and $2,000,000. The company is somewhat confidentthat they will not be fined the full $2,000,000 but they areuncertain about the outcome. The company wants to ensure that theyhave reported the matter correctly in the financial accounts forthe year ended June 2020. The date is August 1 and the directorshave not signed off on the financial accounts. 1. Discuss whetheran adjustment in the financial accounts is required or a notedisclosure, give reason for your answer. 2. Discuss the effect thescenario has on the accounts and how they are presented.

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Introduction This question revolves around whether the event should be treated as provision or contingent liability Both provisions and contingent liabilities are covered under IAS 37 Provisions contingent liabilities and contingent assets Conceptsdefinitions Provisions Provisions are See Answer

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