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The elements of financial statements as per the AASB Framework are assets, liabilities, expenses, income and equity

Accounting

The elements of financial statements as per the AASB Framework are assets, liabilities, expenses, income and equity. Refer to RQ2.21 and pages 74 to 87 of Deegan, as well as the AASB Framework for the definitions and recognition criteria of the various elements. For examples of applying the criteria, check Worked Example 2.3, p.77, Worked Example2.4, p.80 and Worked Example 2.5, p.84.

Assuming each of the following scenarios is material, use the AASB Framework to justify if the items meet any of the definition of assets, liabilities, equity, income or expenses. Provide the reason(s) for your view with reference to the definition criteria for the elements of the financial statements. If you believe the item meets the definition of any of the elements, identify the amount the item would be recorded at.

Trove Ltd operates a number of gold mines and is considering the following three scenarios:

  1. Accidental discovery of a new mineral reserve in an area previously unexplored due to accessibility issues.
  2. Specialised equipment with a nil carrying amount which is expected to be able to be used as a backup item for the next 3 years.
  3. Trove Ltd has donated $10 000 each year to the Gold Miners Benefit Fund for the last 20 years. As yet, no amount has been paid in the current year and nothing has been recorded in the accounts.

 

(Provide answers , clearly stating any assumptions made)

a. Accidental discovery of new mineral reserve   ,

b. Specialised equipment ,

c. Donation

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