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Ias 37

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Ias 37

  • This topic has 3 replies, 3 voices, and was last updated 9 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 14, 2015 at 6:34 am #282251
    mrb1
    Member
    • Topics: 5
    • Replies: 5
    • ☆

    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.

    November 14, 2015 at 7:38 am #282263
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    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

    November 15, 2015 at 3:56 pm #282576
    Sheryar
    Member
    • Topics: 33
    • Replies: 18
    • ☆☆

    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????

    November 15, 2015 at 7:22 pm #282688
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    No, they should all have been taken into account when reaching a fair value for reclassification. No provisions necessary because all dips in value were expensed at date of reclassification.

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