Accounting · Provisions and Contingencies
Baxon is preparing its financial statements for the year ended 30 September 20X7. The company is facing a number of legal claims from its customers with regard to a faulty product sold. The total amount being claimed is $2.5 million. Baxon’s lawyers state that the customers have an 80% chance of being successful. According to IAS 37 (Provisions, Contingent Liabilities and Contingent Assets), what amount should be recognised in respect of the above in Baxon’s statement of financial position as at 30 September 20X7?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Nil
- 2$3,500,000
- 3$2,000,000
- 4$2,500,000✓
Correct answer
$2,500,000
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