contigent liability

could you explain what to take in fs

Tentacle is being sued by an employee who lost a limb in an accident while at work on 15 March 20X7. The
company is contesting the claim as the employee was not following the safety procedures that he had been
instructed to use. Accordingly the financial statements include a note of a contingent liability of $500,000 for
personal injury damages. In a recently decided case where a similar injury was sustained, a settlement figure
of $750,000 was awarded by the court. Although the injury was similar, the circumstances of the accident in
the decided case are different from those of Tentacle’s case

State and quantify how items above should be treated when finalising the financial statements of Tentacle
for the year ended 31 March 20X7.