CA Inter P1 · Chapter 4 · Question 8 of 8
Case: Kesari Transport Ltd expects its newly opened route to incur operating losses of ₹15,00,000 over the next two years. Under AS 29, the company should:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Not recognise any provision for the future operating losses
Explanation
AS 29 states that provisions should not be recognised for future operating losses, because they do not arise from a past event and there is no present obligation. The expectation of losses may, however, indicate that the related assets need to be tested for impairment under AS 28.
More Liabilities Based Accounting Standards MCQs
- Q2Under AS 15, the expense recognised by an enterprise for a defined contribution plan for a period is:
- Q3Case: The actuarial valuation of the gratuity plan of Pushpak Engineering Ltd, which follows AS 15, shows an actuarial loss of ₹3,20,000…
- Q4Case: For the defined benefit plan of Lotus Pharma Ltd: opening present value of obligation ₹20,00,000; current service cost ₹2,50,000…
- Q5Case: Vayu Appliances Ltd sells products with a one-year warranty. If all products sold during the year had minor defects, repair costs…
- Q6Case: Meera Exports Ltd has filed a claim for damages against a supplier. Legal counsel believes it is probable, but not virtually…