What amount should Montague include as a provision in his financial statements for the year ended 31 December 20X3?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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12.10 Montague's paint shop has suffered some bad publicity as a result of a customer claiming to be sunening
from skin rashes as a result of using a new brand of paint sold by Montague's shop. The customer
launched a court action against Montague in November 20X3, claiming damages of $5,000.
Montague's lawyer has advised him that the most probable outcome is that he will have to pay the
customer $3,000.
What amount should Montague include as a provision in his financial statements for the year ended 31
December 20X3?
Transcribed Image Text:12.10 Montague's paint shop has suffered some bad publicity as a result of a customer claiming to be sunening from skin rashes as a result of using a new brand of paint sold by Montague's shop. The customer launched a court action against Montague in November 20X3, claiming damages of $5,000. Montague's lawyer has advised him that the most probable outcome is that he will have to pay the customer $3,000. What amount should Montague include as a provision in his financial statements for the year ended 31 December 20X3?
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