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Discuss the possible treatment of the events

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Reference no: EM132937012

An entity polluted a nearby river on May 6, 2018. After attending numerous court hearings, the entity's legal counsel had advised on December 30, 2019 that it is possible that the entity will lose the case and will incur fines of approximately $500 million to cover damages.

The entity's directors and management have also indicated the following events that took place recently:

Date                                         Event                       Amount

January 15, 2020 Declaration of dividends           $200 million

January 30, 2020 Issue of ordinary shares             $800 million

March 1, 2020 Damage to warehouse                $500 million

March 5, 2020 Discovery of receivables fraud           $100 million

The fraud related to payments made by customers before December 31, 2019 on outstanding receivables. The entity's reporting date is December 31st of each year.

Required:

Problem 1: Discuss the possible treatment of the above events in accordance with IFRS.

Reference no: EM132937012

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