How transaction will be treated with the numbers given

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Problem

Provisions, Contingent liability and contingent Asset- A company that prepares its accounts 30th June and the financials are authorized in August of the same year. By 15th July of the same year, the company received a notice of legal action by a customer on the basis that the company supplied faulty goods to them and has affected the customer. The customer is claiming 5 million damages from the company. The company has estimated that there is a 28% chance that it will win the lawsuit over the customer and there is a 45% chance that the company will loose the lawsuit to the customer and will be given a 3.2 million damages. There is a 27% chance that the customer will win and a 5 million damages will be paid Using IAS 37, explain how the transaction will be treated. Get the instant assignment help. Determine whether this transaction is a provision, contingent liability, or contingent asset and explain how it will be treated with the numbers given.

Reference no: EM133923352

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