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Discuss the proper accounting treatment

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Reference no: EM132468016

Diver Corp. follows IFRS. Below are independent situations:

Point 1: During 2017, a factory worker was injured. The accident was partly the worker's fault, and partly Diver's fault. The employee has sued Diver Corp. for $600,000. The corporation's legal counsel believes it is possible that Diver Corp. will lose the lawsuit. If they lose, the estimated loss is $150,000 to $400,000.

Point 2: During 2017, Diver was sued for $2,500,000. The plaintiff is alleging breach of contract, and Diver's legal counsel believes an unfavourable outcome is more likely than not. A reliable measurement of the award to the plaintiff is between $600,000 and $1,800,000.

Point 3: During 2017, Diver sued another company. The corporation's legal counsel believes it is likely that Diver will be awarded damages of $900,000.

Instructions:

Question 1: Discuss the proper accounting treatment, including any required disclosures, for each situation. Provide the rationale for your answers.

Reference no: EM132468016

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