Recognition of liabilities in the balance sheet State whether or not each of the following events would result in a liability being recognised in the accounts at 30 June. If so, what will the...

Recognition of liabilities in the balance sheet State whether or not each of the following events would result in a liability being recognised in the accounts at 30 June. If so, what will the liability be called? If not, explain the reasons why it would not be recognised as a liability. 1 Taxes for the year ended 30 June, which are not payable until October. 2 Wages to be paid on 2 July to cover the two-week period up to 30 June. 3 The company sells washing machines and gives a one-year warranty to repair or replace any faulty machines. 4 A constructionRecognition of liabilities Samantha is the accountant for Prior Ltd. How would you advise her to account for the following items in the financial statements, as at 30 June 2019? 1 A production manager was appointed on 1 May 2019 under a two-year contract that specifies an annual salary of $50 000 for each of the two years. The contract can be terminated with six months’ notice from either party. 2 The company pays, into a bonus pool, 5 per cent of the profits reported at the end of June for distribution to participating employees.  company receives a $5 million advance in June for a contract. The work will commence in July. 5 The company has signed a contract to pay its managing director $500 000 per annum (inflation adjusted) for the next four years. 6 On 1 June, the company is informed that it is being sued for damages of $1 million caused by a faulty product. The company denies liability. 7 The company will go to arbitration in July to determine the amount of payment to repair environmental damage caused by one of its factories. 3 A subsidiary of Prior Ltd has just been placed in receivership. In April 2019, Prior Ltd signed as guarantor for an $800 000 two-year loan from a finance company to the subsidiary. 4 Based on his experiences in previous years, the customer service manager expects warranty claims against sales made during 2019 to amount to $70 000. 5 Gower and Co. is suing Prior Ltd for breach of contract. Samantha thinks Gower and Co. will probably lose the case.