Boss Ltd identifies a profit of £110,000 for the year before accounting for the following items:

► There is a law suit pending against Boss Ltd for which the amount of damages could be £200,000 if the case is lost.

► Expenditure on research for the year was £150,000. This was in respect of the development of new products. It is probable that a half of this expenditure will lead to a viable product in two years.

Identify two different accounting treatments for each of the above items both of which are in accordance with accounting concepts and conventions.