Reference no: EM133103882

Question - WWF Promotion Inc., is a large company staging musical shows, ballets, operas, wrestling and boxing matches and other events for the public. It has been operating in several international cities around the world. In July, 2020, during a spectacular musical concert, an amateur pilot flying over the location accidently crashed the plane into the stadium. Many spectators were seriously injured. A major class action lawsuit was launched against the company for damages. In defense, the company has argued that the unfortunate accident was not due to any negligence on its part and the company that rented the plane should be responsible for the loss. It further argued that since the flying license had been issued by the government authorities who ought to have applied more rigorous standards before issuing such license, they should be held responsible for this accident.

In 2020, the company's legal team was certain that the company would not be held responsible.

The case dragged on throughout 2020 and 2021.

In 2021, as the case evolved, the legal team revised its opinions. They were now of the opinion that the company would likely be held liable but that the amount of the damages was subject to estimate.

The head of the legal team, after due consultation was of the opinion that the company would have to pay out between $5 million and $10 million- $5 million with a 30% certainty; $7 million with 40% level of certainty; $8 million with 20% certainty and as high as $10 million with a 10% certainty.

WWF's insurer will cover losses due to incidents of this type. The maximum coverage is $2 million, and the deductible is $200,000.

Required - How would the company report this situation in its financial statements in 2020 and in 2021 under

-IFRS?

-ASPE?