After a wedding in 2018, ten people died, possibly as a result of food poisoning from products sold by Ziem Catering Services. Legal proceedings have commenced, seeking damages from Ziem Catering Services but it disputes liability. Up to the date of approval of the financial statements for the year to 31 December 2018, Ziem Catering Services’ lawyers advised that it is probable that it will not be found liable. However, when Ziem Catering Services prepares the financial statements for the year to 31 December 2019, its lawyers advice that, owing to developments in the case, it is probable that it will be found liable. Required: In accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, what is the required accounting treatment? i. At 31 December 2018? ii. At 31 December 2019?
After a wedding in 2018, ten people died, possibly as a result of food poisoning from products sold by Ziem Catering Services. Legal proceedings have commenced, seeking damages from Ziem Catering Services but it disputes liability. Up to the date of approval of the financial statements for the year to 31 December 2018, Ziem Catering Services’ lawyers advised that it is probable that it will not be found liable.
However, when Ziem Catering Services prepares the financial statements for the year to 31 December 2019, its lawyers advice that, owing to developments in the case, it is probable that it will be found liable.
Required:
In accordance with IAS 37 Provisions,
i. At 31 December 2018?
ii. At 31 December 2019?
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