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A retail store has a policy of refunding purchases by dissatisfied customers, even though it is under no legal obligation to do so. Its policy of making refunds is generally known. A provision should be recognised for the best estimate of the costs of refunds.

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Defined benefit plans are post-employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

Wharton Co sells an investment in shares, but retains a call option to repurchase those shares at any time at a price equal to their current market value at the date of repurchase. In this case, Wharton should not derecognize the financial instrument.

For investment entities, investments in subsidiaries are not consolidated, and instead are held at fair value through profit or loss.

An entity is committed to a plan to sell a manufacturing facility and has initiated actions to locate a buyer. At the plan commitment date, there is a backlog of uncompleted customer orders. The entity intends to sell the manufacturing facility, but without its operations. The entity does not intend to transfer the facility to a buyer until after it ceases all operations of the facility and eliminates the backlog of uncompleted customer orders. The delay in the timing of the transfer of the facility imposed by the entity (seller) demonstrates that the facility is not available for immediate sale. It is appropriate for the entity to classify the manufacturing facility as “held for sale”.

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