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A factory worker of ICL Co was seriously injured on 10 June 2015 during a production process.Subsequent developments in this matter are as follows:
(i) On 26 July 2015 the worker filed a claim for 25 million and alleged violation of safety measures on part of ICL. The lawyers of ICL anticipate that there is 60% probability that court would award 12 million and 40% likelihood that the amount would be 8 million.
Required: Whether a provision is required to be incorporated for the year ended 30 June 2015.
There’s a strong argument for a provision of $10.4 – certainly a provision is needed
It is equally arguable to provide $12 on a prudent basis but I believe that expected values would be the way to go
But are we going to make a provision in the statements of the year ended 30 June 2015 , because the estimates of all these amounts were available from 25 July 2015????
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