ACCA · Question 13 · Recording transactions and events
Section A
Silverstone Mining is currently facing a lawsuit from environmental regulators. The company's legal team advises that it is 'possible' but not 'probable' that the company will lose the case and have to pay a fine of $500,000.
How should this be treated in the financial statements according to IAS 37?
Answer options:
Recognize a provision of $500,000 in the statement of financial position
Disclose as a contingent liability in the notes to the financial statements
Ignore it completely as the outflow is not probable
Recognize a provision for a best estimate amount less than $500,000
65 questions · hints · full answers · grading
Expert